What You Need To Know About The Imperial Oil Limited (TSE:IMO) Analyst Downgrade Today
One thing we could say about the analysts on Imperial Oil Limited (TSE:IMO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the consensus from Imperial Oil's five analysts is for revenues of CA$50b in 2024, which would reflect a discernible 2.3% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to be CA$8.97, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of CA$62b and earnings per share (EPS) of CA$8.88 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a pretty serious reduction to revenues and some minor tweaks to earnings numbers.
See our latest analysis for Imperial Oil
The average price target was steady at CA$85.44 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings.
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. We would highlight that sales are expected to reverse, with a forecast 2.3% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Imperial Oil is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Imperial Oil going forwards.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. 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.
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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.
