International Petroleum Corporation Just Recorded A 24% EPS Beat: Here's What Analysts Are Forecasting Next

Investors in International Petroleum Corporation (TSE:IPCO) had a good week, as its shares rose 6.7% to close at CA$18.15 following the release of its first-quarter results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$206m, statutory earnings beat expectations by a notable 24%, coming in at US$0.26 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on International Petroleum after the latest results.

See our latest analysis for International Petroleum

Taking into account the latest results, the consensus forecast from International Petroleum's five analysts is for revenues of US$891.2m in 2024. This reflects a reasonable 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 5.1% to US$1.27 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$894.8m and earnings per share (EPS) of US$1.13 in 2024. Although the revenue estimates have not really changed, we can see there's been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of CA$20.13, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values International Petroleum at CA$23.06 per share, while the most bearish prices it at CA$18.51. This shows there is still a bit of 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that International Petroleum's revenue growth is expected to slow, with the forecast 3.6% annualised growth rate until the end of 2024 being well below the historical 20% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that International Petroleum is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around International Petroleum's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that International Petroleum's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on International Petroleum. Long-term earnings power is much more important than next year's profits. We have forecasts for International Petroleum going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for International Petroleum (1 is concerning!) that you should be aware of.

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.