Strong balance sheet cuts your risk

Article Excerpt

IMPERIAL OIL LTD. $18 is still a buy for the Resources sector of your portfolio. The integrated oil producer (Toronto symbol IMO; Conservative Growth and Income Portfolios; Shares outstanding: 743.9 million; Market cap: $13.4 billion; Price-to-sales ratio: 0.4; Dividend yield: 4.9%; TSINetwork Rating: Average; is cutting its 2020 capital spending plans by about 30% due to sharply lower crude oil prices. It will now spend between $1.1 billion and $1.2 billion, down from its earlier range of $1.6 billion to $1.7 billion. In addition, the company has identified ways to cut $500 million from its costs in 2020. It will also suspend its share buyback program. Investors should note that the company’s strong balance sheet will help it cope with lower oil prices. At the end of 2019, cash stood at $1.7 billion. Despite the stock’s 40% drop since the start of March 2020, Imperial’s long-term debt of $4.45 billion is still a reasonable 33% of its depressed market cap. cap…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.