Results: International Petroleum Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
There's been a notable change in appetite for International Petroleum Corporation (TSE:IPCO) shares in the week since its quarterly report, with the stock down 14% to CA$34.63. It looks like a credible result overall - although revenues of US$212m were what the analysts expected, International Petroleum surprised by delivering a (statutory) profit of US$0.52 per share, an impressive 191% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for International Petroleum from eight analysts is for revenues of US$1.34b in 2027. If met, it would imply a sizeable 81% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 198% to US$2.08. Before this earnings report, the analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$2.05 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.
View our latest analysis for International Petroleum
Even though revenue forecasts increased, there was no change to the consensus price target of CA$43.44, suggesting the analysts are focused on earnings as the driver of value creation. 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 International Petroleum, with the most bullish analyst valuing it at CA$50.13 and the most bearish at CA$39.06 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that International Petroleum's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 61% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 4.4% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.7% annually. So it looks like International Petroleum is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at CA$43.44, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for International Petroleum going out to 2028, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with International Petroleum (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process.
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