What happened?
Vermilion Energy (TSX:VET)(NYSE:VET) turned out to be one of the biggest gainers on the TSX Composite Index in the first quarter. VET stock jumped by more than 65% in Q1 2022 to settle at $26.25 per share, marking its second-biggest quarterly gain in the last 20 years. By comparison, the main Canadian market benchmark posted moderate gains of about 3.1% last quarter.
So what?
Vermilion Energy is a Calgary-based crude oil and natural gas production company. In the last three months, its market cap has risen from $2.6 billion to $4.3 billion. While the recent rally in VET stock was mainly driven by its consistently improving fundamental outlook, the recent surge in oil prices also supported its massive gains.
For a little background, crude oil prices have consistently been rising for the last four months, with rising demand amid supply concerns. The recent Russian invasion of Ukraine and related Western sanctions on Russia worsened the situation, intensifying the rally in oil prices. As rising prices of energy products are likely to improve Vermilion Energy’s profitability, its stock soared.
On March 1, Vermilion Energy announced its Q4 and full-year 2021 financial results. In 2021, the company registered a massive 79% YoY (year-over-year) positive growth in its total revenue to around $2.04 billion after witnessing challenges due to the global pandemic in the previous year. In the December quarter, its fund flows from operations jumped by 23% sequentially to around $322 million, which helped the company post far better-than-expected adjusted net profits. This boosted investors’ confidence further, helping VET stock become the biggest gainer on the TSX in Q1.
Now what?
Interestingly, Vermilion stock has consistently been posting solid double-digit gains for the last six quarters in a row. While the ongoing growth trend in the company’s financials is certainly strong, its fundamental outlook looks even more impressive. Analysts expect Vermilion Energy’s total revenue to rise by around 30% in the ongoing year, as the demand for energy products continues to soar. Also, strengthening oil prices are likely to help it maintain its solid profit margin intact. These positive factors could help VET stock keep trading on a bullish note.
