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Why Is Suncor Energy (SU) Up 0.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Suncor Energy (SU - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Suncor Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Suncor Energy Q2 Earnings Rise Y/Y, Sales Top Estimates
Suncor Energy reported second-quarter 2024 adjusted operating earnings of 93 Canadian cents per share, up from the prior-year quarter's level of 71 Canadian cents. The outperformance can be attributed to the increases in oil sands production and strong demand for refined products.
Operating revenues of $9.5 billion beat the Zacks Consensus Estimate by 14%. The top line also increased approximately 9.3% year over year.
Suncor Energy’s board of directors approved a quarterly dividend of 54.5 Canadian cents per share, on its common shares, payable on Sep 25, to its shareholders of record at the close of business on Sep 4.
The company recorded first-half upstream production of 803,000 barrels per day and refinery throughput of 443,000 barrels per day, with upgrader utilization at 94% and refinery utilization at 95%, including the effects of major turnaround activities.
By Aug 1, 2024, the company had repurchased approximately C$1.4 billion of Suncor’s common shares since the beginning of the year, totaling around 28 million shares at an average price of C$51.24, which represents 2.2% of its outstanding shares as of Dec 31, 2023.
Alberta-based integrated energy company distributed C$1.5 billion to its shareholders, consisting of C$698 million in dividends and C$825 million in share repurchases in the quarter under review.
In the second quarter of 2023, Suncor realized a C$607 million gain from the sale of its U.K. exploration and production (E&P) portfolio. The company generated C$3.4 billion in adjusted funds from operations and C$1.4 billion in free cash flow in the quarter. Additionally, the company successfully completed around C$800 million in turnaround activities, finishing the work safely, efficiently and ahead of schedule.
Segmental Performance
Upstream: Total production in this segment increased 3.9% year over year to 770,600 barrels of oil equivalent per day (boe/d) from 741,900 boe/d.
The company’s E&P volume (international, offshore and natural gas) slipped 13.1% to 54,600 boe/d from 62,800 boe/d in the year-ago quarter. The figure also missed the consensus estimate of 55,000 boe/d. This was due to the divestment of the company’s U.K. portfolio, the absence of production from White Rose and reduced output from Hebron. Operating earnings totaled C$1.63 billion compared with C$1.25 billion in the year-ago quarter.
Operating cost per barrel decreased to C$28.45 from C$29.10 in the corresponding period of 2023. This decrease was caused by higher production volumes and reduced operations and maintenance expenses. However, upgrader utilization decreased to 86% from 92% a year earlier.
Total oil sands bitumen production rose to 834,400 barrels per day (bbls/d) in the second quarter of 2024, up from 814,300 bbls/d in the previous year. This increase was attributed to the company’s higher working interest along with record second-quarter gross bitumen production at Fort Hills and record quarterly production at Firebag. Moreover, the figure exceeded the consensus estimate of 736,000 bbls/d.
Non-upgraded bitumen production rose to 254,300 boe/d from 174,100 boe/d in the previous year. This increase was driven by the company’s higher working interest in Fort Hills, reduced demand for upgrader feedstock due to scheduled maintenance and record production at Firebag. Additionally, the figure surpassed the consensus estimate of 237,000 boe/d.
Net synthetic crude oil (SCO) and diesel production declined to 461,700 boe/d from 505,000 boe/d a year earlier. Fort Hills reported an average second-quarter volume of 254,300 barrels per day (bpd), higher than the year-ago quarter’s level of 174,100 bpd.
The cash operating cost per barrel decreased to C$30.6 from C$31.4 in the prior-year period. This cost reduction was due to higher production volumes and lower prices for natural gas and other commodities.
Downstream: Adjusted operating earnings from the unit increased to C$588 billion from the year-ago quarter’s reported figure of C$494 million. The growth in adjusted operating earnings was driven by higher refinery production and a first-in-first-out (FIFO) inventory valuation gain in the quarter under discussion.
Refined product sales totaled 594,700 bpd, up from the prior-year quarter’s level of 547,000 bpd. This growth was driven by strong refinery output, effective use of the company’s extensive domestic sales network and the impact of restart activities at the Commerce City refinery. The figure also surpassed the consensus estimate of 517,000 bpd.
Refinery crude throughput totaled 430,500 bpd compared with 394,400 bpd in the year-ago period. Refinery utilization was 92% compared with 85% a year ago. The increase in refinery crude throughput was due to strong utilization rates across all refineries in the quarter under review.
Financial Position
Total expenses increased 15.9% to C$10.9 billion from the prior-year quarter.
Cash flow from operating activities amounted to C$3.8 billion, up from the prior-year quarter’s level of C$2.8 billion. Suncor Energy incurred capital expenditures worth C$2 billion in the second quarter of 2024.
As of Jun 30, 2024, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$11.4 billion. Its total debt to total capital was 20.4%.
Guidance
Suncor expects to conduct planned maintenance at Oil Sands Base Upgrader 2 and Mackay River in the third quarter of 2024. The Upgrader 2 maintenance is anticipated to conclude in the fourth quarter. These activities have been influencing our 2024 outlook.
Suncor aims to increase free funds flow by C$3.3 billion annually by 2026 compared to 2023. The company plans to achieve this through cost and capital reductions, increased upstream production and enhanced downstream reliability and margins.
The company plans to increase upstream production by 100,000 bbls/d from 2023 to 2026.
Suncor has increased share buybacks to approximately 75% of excess funds and plans to raise this to nearly 100% once the revised net debt target of C$8 billion is met.
SU expects production in the range of 770,000-810,000 boe/d for 2024.
Oil Sands operations yield is anticipated in the band of 430,000-460,000 bbls/d, while the same for Fort Hills is projected in the 155,000-165,000 bbls/d range. Syncrude and Exploration and Production operations yield is expected in the range of 175,000-190,000 bpd and 45,000-55,000 boe/d, respectively.
The company also expects capital expenditures in the band of C$6.3-C$6.5 billion for the full year 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Suncor Energy has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Suncor Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Suncor Energy belongs to the Zacks Oil and Gas - Integrated - Canadian industry. Another stock from the same industry, Imperial Oil (IMO - Free Report) , has gained 2.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Imperial Oil reported revenues of $9.78 billion in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $1.54 for the same period compares with $0.86 a year ago.
For the current quarter, Imperial Oil is expected to post earnings of $1.56 per share, indicating a change of -24.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.9% over the last 30 days.
Imperial Oil has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Suncor Energy (SU) Up 0.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Suncor Energy (SU - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Suncor Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Suncor Energy Q2 Earnings Rise Y/Y, Sales Top Estimates
Suncor Energy reported second-quarter 2024 adjusted operating earnings of 93 Canadian cents per share, up from the prior-year quarter's level of 71 Canadian cents. The outperformance can be attributed to the increases in oil sands production and strong demand for refined products.
Operating revenues of $9.5 billion beat the Zacks Consensus Estimate by 14%. The top line also increased approximately 9.3% year over year.
Suncor Energy’s board of directors approved a quarterly dividend of 54.5 Canadian cents per share, on its common shares, payable on Sep 25, to its shareholders of record at the close of business on Sep 4.
The company recorded first-half upstream production of 803,000 barrels per day and refinery throughput of 443,000 barrels per day, with upgrader utilization at 94% and refinery utilization at 95%, including the effects of major turnaround activities.
By Aug 1, 2024, the company had repurchased approximately C$1.4 billion of Suncor’s common shares since the beginning of the year, totaling around 28 million shares at an average price of C$51.24, which represents 2.2% of its outstanding shares as of Dec 31, 2023.
Alberta-based integrated energy company distributed C$1.5 billion to its shareholders, consisting of C$698 million in dividends and C$825 million in share repurchases in the quarter under review.
In the second quarter of 2023, Suncor realized a C$607 million gain from the sale of its U.K. exploration and production (E&P) portfolio. The company generated C$3.4 billion in adjusted funds from operations and C$1.4 billion in free cash flow in the quarter. Additionally, the company successfully completed around C$800 million in turnaround activities, finishing the work safely, efficiently and ahead of schedule.
Segmental Performance
Upstream: Total production in this segment increased 3.9% year over year to 770,600 barrels of oil equivalent per day (boe/d) from 741,900 boe/d.
The company’s E&P volume (international, offshore and natural gas) slipped 13.1% to 54,600 boe/d from 62,800 boe/d in the year-ago quarter. The figure also missed the consensus estimate of 55,000 boe/d. This was due to the divestment of the company’s U.K. portfolio, the absence of production from White Rose and reduced output from Hebron. Operating earnings totaled C$1.63 billion compared with C$1.25 billion in the year-ago quarter.
Operating cost per barrel decreased to C$28.45 from C$29.10 in the corresponding period of 2023. This decrease was caused by higher production volumes and reduced operations and maintenance expenses. However, upgrader utilization decreased to 86% from 92% a year earlier.
Total oil sands bitumen production rose to 834,400 barrels per day (bbls/d) in the second quarter of 2024, up from 814,300 bbls/d in the previous year. This increase was attributed to the company’s higher working interest along with record second-quarter gross bitumen production at Fort Hills and record quarterly production at Firebag. Moreover, the figure exceeded the consensus estimate of 736,000 bbls/d.
Non-upgraded bitumen production rose to 254,300 boe/d from 174,100 boe/d in the previous year. This increase was driven by the company’s higher working interest in Fort Hills, reduced demand for upgrader feedstock due to scheduled maintenance and record production at Firebag. Additionally, the figure surpassed the consensus estimate of 237,000 boe/d.
Net synthetic crude oil (SCO) and diesel production declined to 461,700 boe/d from 505,000 boe/d a year earlier. Fort Hills reported an average second-quarter volume of 254,300 barrels per day (bpd), higher than the year-ago quarter’s level of 174,100 bpd.
The cash operating cost per barrel decreased to C$30.6 from C$31.4 in the prior-year period. This cost reduction was due to higher production volumes and lower prices for natural gas and other commodities.
Downstream: Adjusted operating earnings from the unit increased to C$588 billion from the year-ago quarter’s reported figure of C$494 million. The growth in adjusted operating earnings was driven by higher refinery production and a first-in-first-out (FIFO) inventory valuation gain in the quarter under discussion.
Refined product sales totaled 594,700 bpd, up from the prior-year quarter’s level of 547,000 bpd. This growth was driven by strong refinery output, effective use of the company’s extensive domestic sales network and the impact of restart activities at the Commerce City refinery. The figure also surpassed the consensus estimate of 517,000 bpd.
Refinery crude throughput totaled 430,500 bpd compared with 394,400 bpd in the year-ago period. Refinery utilization was 92% compared with 85% a year ago. The increase in refinery crude throughput was due to strong utilization rates across all refineries in the quarter under review.
Financial Position
Total expenses increased 15.9% to C$10.9 billion from the prior-year quarter.
Cash flow from operating activities amounted to C$3.8 billion, up from the prior-year quarter’s level of C$2.8 billion. Suncor Energy incurred capital expenditures worth C$2 billion in the second quarter of 2024.
As of Jun 30, 2024, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$11.4 billion. Its total debt to total capital was 20.4%.
Guidance
Suncor expects to conduct planned maintenance at Oil Sands Base Upgrader 2 and Mackay River in the third quarter of 2024. The Upgrader 2 maintenance is anticipated to conclude in the fourth quarter. These activities have been influencing our 2024 outlook.
Suncor aims to increase free funds flow by C$3.3 billion annually by 2026 compared to 2023. The company plans to achieve this through cost and capital reductions, increased upstream production and enhanced downstream reliability and margins.
The company plans to increase upstream production by 100,000 bbls/d from 2023 to 2026.
Suncor has increased share buybacks to approximately 75% of excess funds and plans to raise this to nearly 100% once the revised net debt target of C$8 billion is met.
SU expects production in the range of 770,000-810,000 boe/d for 2024.
Oil Sands operations yield is anticipated in the band of 430,000-460,000 bbls/d, while the same for Fort Hills is projected in the 155,000-165,000 bbls/d range. Syncrude and Exploration and Production operations yield is expected in the range of 175,000-190,000 bpd and 45,000-55,000 boe/d, respectively.
The company also expects capital expenditures in the band of C$6.3-C$6.5 billion for the full year 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Suncor Energy has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Suncor Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Suncor Energy belongs to the Zacks Oil and Gas - Integrated - Canadian industry. Another stock from the same industry, Imperial Oil (IMO - Free Report) , has gained 2.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Imperial Oil reported revenues of $9.78 billion in the last reported quarter, representing a year-over-year change of +11.2%. EPS of $1.54 for the same period compares with $0.86 a year ago.
For the current quarter, Imperial Oil is expected to post earnings of $1.56 per share, indicating a change of -24.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.9% over the last 30 days.
Imperial Oil has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.