Assessing International Petroleum (TSX:IPCO)’s Valuation After Its Newly Authorized Share Buyback Program

International Petroleum (TSX:IPCO) has launched a new share buyback, planning to repurchase and cancel up to about 6.5 million shares, roughly 6% of its float, over the next year.

See our latest analysis for International Petroleum.

The new buyback comes on top of a strong run. International Petroleum’s 30 day share price return of 10.04 percent has contributed to a 58.31 percent year to date gain and a 74.42 percent one year total shareholder return, suggesting momentum is still building as investors respond to its growth and capital return story.

If this kind of capital return story has your attention, it is also worth exploring fast growing stocks with high insider ownership for other fast growing companies where management has meaningful skin in the game.

Yet with the share price already rallying hard and even trading above the average analyst target, the key question now is whether International Petroleum still looks undervalued or if the market is already pricing in its future growth.

Most Popular Narrative: 9.7% Overvalued

With the latest close above the narrative fair value estimate of CA$25.17, investors are weighing how much future growth is already in the price.

The analysts have a consensus price target of CA$24.946 for International Petroleum based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$28.03, and the most bearish reporting a price target of just CA$22.42.

Read the complete narrative.

Curious what kind of production ramp up, margin expansion and earnings jump would need to line up to support that outlook? The narrative reveals the full playbook.

Result: Fair Value of CA$25.17 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that optimistic playbook could yet be derailed by setbacks in executing Blackrod Phase 1 or by weaker oil prices that strain cash flows and reduce balance sheet flexibility.

Find out about the key risks to this International Petroleum narrative.

Another View: Cash Flows Tell a Different Story

While the consensus narrative now views International Petroleum as modestly overvalued, our DCF model presents a different perspective, with a fair value estimate of about CA$84.47 per share, which is roughly 67 percent above the current price. Could the market be underestimating Blackrod driven cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out International Petroleum for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 904 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own International Petroleum Narrative

If you see things differently or would rather dig into the numbers yourself, you can build a custom, data driven narrative in minutes, Do it your way.

A great starting point for your International Petroleum research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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