Yahoo Finance Imperial Oil Limited (TSE:IMO) Analysts Just Slashed This Year's Revenue Estimates By 17%
The latest analyst coverage could presage a bad day for Imperial Oil Limited (TSE:IMO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the six analysts covering Imperial Oil provided consensus estimates of CA$52b revenue in 2023, which would reflect an uncomfortable 11% decline on its sales over the past 12 months. Statutory earnings per share are supposed to nosedive 35% to CA$8.25 in the same period. Previously, the analysts had been modelling revenues of CA$63b and earnings per share (EPS) of CA$8.31 in 2023. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a substantial drop in revenues and some minor tweaks to earnings numbers.
See our latest analysis for Imperial Oil
The consensus has reconfirmed its price target of CA$80.22, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Imperial Oil's market value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Imperial Oil, with the most bullish analyst valuing it at CA$97.00 and the most bearish at CA$72.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Imperial Oil's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2023. This indicates a significant reduction from annual growth of 12% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.7% per year. So it's pretty clear that Imperial Oil's revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Imperial Oil going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Imperial Oil analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
