Petro-Canada: Continuing to Rally

Petro-Canada (PCZ) shares have been in an aggressive mood since the company posted awesome first-quarter results on Apr 29, growing its net income 82% from the same period last year to $1.086 billion. The growth in income was fueled by higher selling prices and increased production. Estimates continue to rise, and the company's share price recently established a new 52-week and all-time high just above the $62 mark.

Petro-Canada is an integrated oil and gas company that explores for, develops and distributes its products in Canada and worldwide. The company was founded in 1969, carries a market cap. of $29 billion and is headquartered in Calgary, Canada.

First-Quarter Results

Petro-Canada shares have been on a fierce rally for most of the last month, coming on the heels of the company's amazing first-quarter results, reported on Apr 29.

Net income jumped 82% from the same period last year to $1.076 billion. This increase was not just the product of higher selling prices, but also due to increased production. First quarter production averaged 427,000 boe/d net to Petro-Canada in 2008, up from 405,000 boe/d net in the same quarter of 2007.

This produced earnings of $2.22 per share, well ahead of analyst estimates, who were looking for earnings of $1.70 per share.

"We're off to a good start for the year, with excellent first quarter earnings," said Ron Brenneman, president and chief executive officer. "For the remainder of the year, we remain focused on our 2008 priorities - to deliver production within our guidance range through strong, safe and reliable operations, and to advance growth through our seven major projects."

Estimates Boosted

As one might assume, after the excellent quarterly results, the analyst community upgraded its earnings projections. Within just the last 30 days, the current-year estimate has gained 49 cents, advancing to its current projection of $7.14 per share.

On a forward basis, using projected full-year earnings, this company's stock looks very attractively valued, carrying a P/E multiple of just 8.4X, well below the reading of the market as a whole.

Petro Canada also bears the favor of incredible margins, carrying a 50% reading in this statistical category, compared to the industry average of 13.5%.

The Chart

As previously mentioned, Petro-Canada's stock price has been booming for the last month, in response to the company's excellent first-quarter results. In the process, a new 52-week and all-time high has been established, just above $62. Moving forward, this is a very attractive stock that should continue to perform well because it has the earnings needed to support future share appreciation. Take a look at the chart below.

(click to enlarge)

Comments

[JOSEPH FOSTER:]

I OWN PCZ IT IS UNDER VALUE COMPARED TO OTHER OIL STOCK.
VERY BULLISH ON OIL STOCKS AND OIL DRILLING COMPANIES.
GOOD PICK IS ALSO PBR THE LARGEST OIL COMPANY IN BRAZIL NO 3 IN THE WORLD.
BIG OIL DISCOVERY OFF SHORE NEAR RIO.
JOSEPH FOSTER USA AND UK

2008 May 25 04:43 PM

[Kunst:]

Did you lose your caps lock key?

2008 May 26 02:07 AM