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Why Is Suncor Energy (SU) Down 1.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Suncor Energy (SU - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500 and the DJIA.
Will the recent negative trend continue leading up to its next earnings release, or is Suncor Energy due for a breakout? 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 catalysts.
Second-Quarter 2018 Results
Suncor Energy reported second-quarter 2018 earnings per share of 57 cents, in line with the Zacks Consensus Estimate as production gains at its Fort Hills oil sand mining project and high oil prices were offset by increased expenses, lower refined product sales and reduced refinery utilization.
However, the bottom line improved from the prior-year earnings of 9 cents per share.
Quarterly earnings came in at C$1,190 million. Quarterly revenues of $8,082 million surpassed the Zacks Consensus Estimate of $6,528 million. Further, the top line increased from $5,398 million in the year-ago quarter.
Production
Total upstream production in the reported quarter was 661,700 barrels of oil equivalent per day (Boe/d), up from the prior-year level of 539,100 Boe/d.
Oil Sands operations volume was 358,900 barrels per day (Bbl/d) compared with 352,600 Bbl/d in the year-ago quarter. The increase can be attributed to robust volumes from In Situ production, partly offset by lower SCO output at Oil Sands Base.
Production from Syncrude operations increased to 117,800 Bbl/d compared with 61,000 Bbl/d in the year-ago quarter. In the quarter under review, upgrader reliability at Syncrude was 58%, higher than 33% in the year-ago quarter.
Suncor’s Exploration and Production segment (consisting of International, as well as Offshore and Natural Gas segments) produced 114,100 Boe/d compared with 125,500 Boe/d in the prior-year quarter. The results were impacted by planned maintenance at White Rose, partially offset by increased output from Hebron.
Notably, Fort Hills production came in at 70,900 Bbl/d in the quarter under review. The third and last extraction train at Fort Hills came online in the second quarter, which is expected to further ramp up the production capacity.
Also, refinery utilization came in at 74% compared with 94% in the year-ago quarter.
Product Sales
The company’s refined product sales of 500,000 Bbl/d decreased from the prior-year level of 521,900 Bbl/d amid planned maintenance work and delayed completion of Edmonton refinery turnaround. Crude throughput came in at 344,100 Bbl/d in the second quarter compared with 435,500 Bbl/d in the year-ago quarter amid maintenance across Suncor’s four refineries.
Expenses
Total expenses in the reported quarter increased to C$8,952 million from C$6,704 million in the year-ago quarter. The increase in total expenses is mainly attributed to higher costs related to the purchase of oil along with a rise in operating expenses.
Balance Sheet & Capital Expenditures
As of Jun 30, 2018, the Canadian energy giant had cash and cash equivalents of C$1,983 million and total long-term debt of C$13,535 million. The total debt-to-capitalization ratio was approximately 22.9%. The company incurred capital expenditure of C$1,762 million in the quarter under review.
Dividend and Share Repurchase
Suncor returned C$587 million to its shareholders through dividends and bought back C$849 million of outstanding shares in second-quarter 2018.
On Jul 25, 2018, the company’s board members approved a quarterly dividend of 36 cents per share ($1.44 a share annualized), in line with the previous payout. The dividend will be paid on Sep 25, 2018 to shareholders of record as of Sep 4.
Guidance Trimmed
Suncor has chopped its 2018 production guidance to take into account the power outage at Syncrude oilsands mine and upgrader. The company now anticipates producing 740,000-750,000 Boe/d compared with the prior guided range of 740,000-780,000 Boe/d.
Production from oilsands is now estimated within 415,000-430,000 bbls/d, down from theprior guided range of 425,000-455,000 bbls/d. Production estimates from Syncrude has also been revised downward to 140,000-145,000 bbls/d compared withprior expectation of 150,000-165,000 bbls/d. However, Fort Hills production is expected to increase to 60,000-70,000 bbls/d, up from the prior guided range of 50,000-60,000 bbls/d.
For 2018, capex is expected in the band of $5.2-$5.5 billion compared with prior expectation of $4.5-$5.0 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Suncor Energy has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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.
Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for value and to a lesser degree momentum.
Outlook
Suncor Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Suncor Energy (SU) Down 1.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Suncor Energy (SU - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500 and the DJIA.
Will the recent negative trend continue leading up to its next earnings release, or is Suncor Energy due for a breakout? 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 catalysts.
Second-Quarter 2018 Results
Suncor Energy reported second-quarter 2018 earnings per share of 57 cents, in line with the Zacks Consensus Estimate as production gains at its Fort Hills oil sand mining project and high oil prices were offset by increased expenses, lower refined product sales and reduced refinery utilization.
However, the bottom line improved from the prior-year earnings of 9 cents per share.
Quarterly earnings came in at C$1,190 million. Quarterly revenues of $8,082 million surpassed the Zacks Consensus Estimate of $6,528 million. Further, the top line increased from $5,398 million in the year-ago quarter.
Production
Total upstream production in the reported quarter was 661,700 barrels of oil equivalent per day (Boe/d), up from the prior-year level of 539,100 Boe/d.
Oil Sands operations volume was 358,900 barrels per day (Bbl/d) compared with 352,600 Bbl/d in the year-ago quarter. The increase can be attributed to robust volumes from In Situ production, partly offset by lower SCO output at Oil Sands Base.
Production from Syncrude operations increased to 117,800 Bbl/d compared with 61,000 Bbl/d in the year-ago quarter. In the quarter under review, upgrader reliability at Syncrude was 58%, higher than 33% in the year-ago quarter.
Suncor’s Exploration and Production segment (consisting of International, as well as Offshore and Natural Gas segments) produced 114,100 Boe/d compared with 125,500 Boe/d in the prior-year quarter. The results were impacted by planned maintenance at White Rose, partially offset by increased output from Hebron.
Notably, Fort Hills production came in at 70,900 Bbl/d in the quarter under review. The third and last extraction train at Fort Hills came online in the second quarter, which is expected to further ramp up the production capacity.
Also, refinery utilization came in at 74% compared with 94% in the year-ago quarter.
Product Sales
The company’s refined product sales of 500,000 Bbl/d decreased from the prior-year level of 521,900 Bbl/d amid planned maintenance work and delayed completion of Edmonton refinery turnaround. Crude throughput came in at 344,100 Bbl/d in the second quarter compared with 435,500 Bbl/d in the year-ago quarter amid maintenance across Suncor’s four refineries.
Expenses
Total expenses in the reported quarter increased to C$8,952 million from C$6,704 million in the year-ago quarter. The increase in total expenses is mainly attributed to higher costs related to the purchase of oil along with a rise in operating expenses.
Balance Sheet & Capital Expenditures
As of Jun 30, 2018, the Canadian energy giant had cash and cash equivalents of C$1,983 million and total long-term debt of C$13,535 million. The total debt-to-capitalization ratio was approximately 22.9%. The company incurred capital expenditure of C$1,762 million in the quarter under review.
Dividend and Share Repurchase
Suncor returned C$587 million to its shareholders through dividends and bought back C$849 million of outstanding shares in second-quarter 2018.
On Jul 25, 2018, the company’s board members approved a quarterly dividend of 36 cents per share ($1.44 a share annualized), in line with the previous payout. The dividend will be paid on Sep 25, 2018 to shareholders of record as of Sep 4.
Guidance Trimmed
Suncor has chopped its 2018 production guidance to take into account the power outage at Syncrude oilsands mine and upgrader. The company now anticipates producing 740,000-750,000 Boe/d compared with the prior guided range of 740,000-780,000 Boe/d.
Production from oilsands is now estimated within 415,000-430,000 bbls/d, down from theprior guided range of 425,000-455,000 bbls/d. Production estimates from Syncrude has also been revised downward to 140,000-145,000 bbls/d compared withprior expectation of 150,000-165,000 bbls/d. However, Fort Hills production is expected to increase to 60,000-70,000 bbls/d, up from the prior guided range of 50,000-60,000 bbls/d.
For 2018, capex is expected in the band of $5.2-$5.5 billion compared with prior expectation of $4.5-$5.0 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Suncor Energy has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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.
Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for value and to a lesser degree momentum.
Outlook
Suncor Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.