Top broker forecasts 14% upside for this battered ASX 200 energy stock

Down 30% since April, this leading broker sees brighter days ahead for the ASX 200 energy stock.

| More on:
A smiling woman puts fuel into her car at a petrol pump.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Following on a six-month run higher, shares in S&P/ASX 200 Index (ASX: XJO) energy stock Ampol Ltd (ASX: ALD) have been in sharp decline since early April.

How sharp?

Well, at yesterday's closing price of $28.95, the Ampol share price is down 29.87% since the market close on 5 April.

Created with Highcharts 11.4.3Ampol PriceZoom1M3M6MYTD1Y5Y10YALL1 Sep 20236 Aug 2025Zoom ▾Oct '23Jan '24Apr '24Jul '24Oct '24Jan '25Apr '25Jul '25Jan '24Jan '24Jul '24Jul '24Jan '25Jan '25Jul '25Jul '25www.fool.com.au

The ASX 200 energy stock came under additional selling pressure at the end of April after reporting its quarterly results. Among the headwinds from those results was a 7.3% year-on-year decline in Ampol's refinery production, which fell to 1,381 ML for the three-month period.

But Jeffries believes that the worst is over for Ampol.

The broker raised Ampol to a buy rating with a $33 target price. That's 13.9% above yesterday's closing price.

What's the latest from the ASX 200 energy stock?

As you're likely aware, Ampol supplies Australia's largest branded petrol and convenience network. The company also refines, imports and markets fuels and lubricants.

What you may not be aware of is that the ASX 200 energy stock reported its half-year results on 19 August.

While the company's sales volumes for the six-month period increased by 15.2% year on year to 13.25 billion litres, revenue from ordinary activities declined 1.1% to $18.24 billion.

Group statutory net profit after tax (NPAT) soared 197.3% compared to the prior corresponding half to $235.2 million. However, this dramatic statutory profit increase was mostly due to much smaller inventory losses.

As Motley Fool writer Mitchell Lawler noted on the day, "In 1H 2023, Ampol recorded a $220.1 million hit to its books, whereas this time around, it's only $21.1 million."

Which explains why, despite the big profit boost on paper, the interim fully franked Ampol dividend of 60 cents per share was down 36.8% from the prior interim dividend.

Still, with a full-year passive income payout of $2.40 a share, the ASX 200 energy stock trades on a juicy, fully franked, trailing dividend yield of 8.3%.

With the Ampol share price tumbling over recent months, the company's price-to-earnings (P/E) ratio has also fallen to just 9.8 times.

As for the balance sheet, Ampol reported net borrowings at 30 June of $2.56 billion. The company's liquidity position remains solid, with committed facilities of $5.2 billion.

The ASX 200 energy stock could also benefit as its Brisbane-based Lytton refinery returns to normal operations following upgrade work.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

An oil worker in front of a pumpjack using a tablet.
Energy Shares

1 magnificent ASX energy stock down 30% to buy and hold for decades

Let's see why this energy stock could be worth considering.

Read more »

An oil miner with his thumbs up.
Energy Shares

Why Beach Energy shares just came roaring back

Beach Energy shares are smashing the benchmark on Monday. But why?

Read more »

an oil refinery worker checks her laptop computer in front of a backdrop of oil refinery infrastructure. The woman has a serious look on her face.
Energy Shares

Earnings season begins! 6 ASX 200 energy stocks report on these dates

Let's find out when.

Read more »

A graphic depicting a businessman in a business suit standing with his hand to his chin looking at a large red arrow pointing upwards above a line up of oil barrels againist the backdrop of a world map.
Energy Shares

How Woodside shares smashed the benchmark returns in July

Woodside shares were up an impressive 12.5% over the month

Read more »

Image of a fist holding two yellow lightning bolts against a red backdrop.
Energy Shares

Does Macquarie rate Origin Energy shares a buy, hold or sell?

The broker raised its price target on the stock last month.

Read more »

Red arrow going downwards in front of oil pumpjacks.
Energy Shares

Why did this $2.7 billion ASX 200 energy share just crash 11%?

Investors are fleeing the ASX 200 energy stock today. But why?

Read more »

Young man in shirt and tie staring at his laptop screen watching the Paladin Energy share price tank today
Energy Shares

This broker thinks Boss Energy shares are a buy after the huge sell-off

Has the sell-off made these shares more attractive?

Read more »

Miner and company person analysing results of a mining company.
Energy Shares

Should you buy Boss Energy shares now after Monday's huge sell-off?

Macquarie gives its verdict on Boss Energy shares following Monday’s crash.

Read more »