By Rob Otman
Imperial Oil (NYSE: IMO) is a large cap company that operates within the oil, gas and consumable fuels industry. Its market cap is $24 billion today and the total one-year return is -6.62% for shareholders.
Imperial Oil stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Imperial Oil reported a recent EPS growth rate of -77.32%. That’s below the oil, gas and consumable fuels industry average of 176.96%. That’s not a good sign. We like to see companies that have higher earnings growth.
✗ Price-to-Earnings (P/E): The average price-to-earnings ratio of the oil, gas and consumable fuels industry is 28.21. And Imperial Oil’s ratio comes in at 28.24. Its valuation looks expensive compared to many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Imperial Oil stock is 21.31%. That’s below the oil, gas and consumable fuels industry average of 154.98%. That’s a good sign. Imperial Oil’s debt levels are not out of control.
✗ Free Cash Flow per Share Growth: Imperial Oil has decreased its FCF per share over the last year relative to its competitors. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of Imperial Oil comes in at -1.7% today. And generally, the higher, the better. We also like to see this ratio above competitors. Imperial Oil’s profit margin is below the oil, gas and consumable fuels average of 13.6%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Imperial Oil is 1.98% and that’s below its industry average ROE of 12.15%.
Imperial Oil stock passes one of our six key metrics today. That’s why our Investment U Stock Grader gives it a Sell.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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