Imperial Oil Limited Common Stock (IMO)

FairStock Score: 47/100 — MIXED

Key Financials

Strengths

• Generates $4.1 billion in annual free cash flow (6.5% yield on market cap)
• Solid return on equity of 14.3% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.19, providing financial flexibility

Concerns

• Trades significantly above Graham Number ($70) with negative 80% margin of safety—limited downside protection
• Revenue declining at 8.7% year-over-year signals potential demand weakness or market share loss

AI Analysis

Imperial Oil Limited Common Stock is a large-cap energy company valued at $62.9 billion. The business generates $46.9 billion in annual revenue with a 1.0% net margin and $4.1 billion in free cash flow. From a quality standpoint, Imperial shows Altman Z-Score of 2.9 in the grey zone and adequate 14% ROE. On valuation, the stock is trading at a premium 26.7x earnings, with trades above its Graham Number with a negative 80% margin. Growth dynamics show revenue growing at -8.7% and profit growth of -59.8%. The 2.0% dividend yield adds an income component for patient holders. Our composite FairStock Score of 46/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $4.1 billion in annual free cash flow (6.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the energy space. Sluggish -9% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer