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Why Is Suncor Energy (SU) Down 6.3% 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 6.3% in that time frame, underperforming the S&P 500.
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 its most recent earnings report in order to get a better handle on the important drivers.
Suncor Energy Q2 Earnings, Revenue Beat
Suncor Energy reported second-quarter 2021 operating earnings per share of 39 cents, beating the Zacks Consensus Estimate of 36 cents. The bottom line also rebounded from the year-ago loss of 71 cents per share. This outperformance is led by a ramped-up production in the upstream segment and improved refined product sales.
Quarterly operating revenues of $7.4 billion came ahead of the Zacks Consensus Estimate of $6.8 billion. Moreover, the top line rose 141.74% from $3.06 billion in the year-ago quarter.
Upstream
Total upstream production in the reported quarter was 699,700 barrels of oil equivalent per day (Boe/d), up 6.7% from the prior-year level of 655,500 Boe/d. This rise in output was owing to better Syncrude and Oil Sands production. Evidently, this upstream unit recorded operating earnings of C$250 million against the loss of C$51 million in the prior-year quarter.
Output from Syncrude operations scaled down to 113,700 Bbl/d from 119,500 Bbl/d a year earlier.
Fort Hills production came in at 45,300 barrels per day (BPD) in the quarter, lower than 47,300 BPD registered in the year-ago period.
Oil Sands operations volume was 470,100 Bbl/d compared with 396,300 Bbl/d in the year-earlier quarter. Operating costs per barrel decreased to C$23.85 in the quarter under review from C$25.8 in the corresponding period of 2020. Upgrader utilization increased to 96% from 93% in the comparable quarter of last year.
Suncor Energy’s Exploration and Production segment (consisting of International, Offshore and Natural Gas segments) produced 84,000 Boe/d compared with 101,800 Boe/d in the prior-year quarter. Results were impacted by the absence of Terra Nova production, planned turnaround activities at Buzzard and natural production declines.
Downstream
Operating earnings from the downstream unit rose to C$361 million from the year-ago figure of C$145 million, attributable to improved margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 463,300 Bbl/d from the prior-year level of 438,800 Bbl/d.
Crude throughput came in at 325,300 Bbl/d in the second quarter compared with 350,400 Bbl/d in the year-ago period. Also, refinery utilization was 70%.
Expenses
Total expenses in the reported quarter climbed to C$8.01 billion from C$5.3 billion in the year-earlier period. This downtrend is mainly led by higher costs related to the purchases of crude oil and products as well as a rise in operating, selling and general costs.
Financials
Cash flow from operating activities summed C$2.086 billion in the second quarter, up from the prior-year figure of C$768 million. The company incurred capital expenditure worth C$1.31billion in the quarter under discussion. As of Jun 30, 2021, Suncor Energy had cash and cash equivalents worth C$2.04 billion and a total long-term debt of C$14.71 billion. Its total debt to total capital was 28.9%. During the quarter under review, the company distributed $315 million as dividends.
Guidance
For the full year, this Alberta-based integrated player’s Fort Hills production guidance was lowered from 65,000-85,000 BPD to 45,000-55,000 BPD to reflect extra work necessary to preserve slope integrity on the mine's south side. As a result, the cash operating expenses per barrel at Fort Hills were increased from $25-$29 to $37-$42.
Suncor Energy will continue to focus on strengthening its financial position. The company deployed about two-thirds of its free cash flow to debt repayment and one-third to share repurchases.
The company also adjusted its capital expenditure allocation across business sectors to indicate decreased spending on East Coast Canada projects in E&P, offset by an increase in the scope of refinery turnaround efforts in R&M. Upstream E&P capital expenditure forecast is cut from $350-$450 million range to $300-$400 million range while Downstream capex view is increased to $750-$850 million from the prior projection of $700-$800 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Suncor Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 this revision 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.
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Why Is Suncor Energy (SU) Down 6.3% 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 6.3% in that time frame, underperforming the S&P 500.
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 its most recent earnings report in order to get a better handle on the important drivers.
Suncor Energy Q2 Earnings, Revenue Beat
Suncor Energy reported second-quarter 2021 operating earnings per share of 39 cents, beating the Zacks Consensus Estimate of 36 cents. The bottom line also rebounded from the year-ago loss of 71 cents per share. This outperformance is led by a ramped-up production in the upstream segment and improved refined product sales.
Quarterly operating revenues of $7.4 billion came ahead of the Zacks Consensus Estimate of $6.8 billion. Moreover, the top line rose 141.74% from $3.06 billion in the year-ago quarter.
Upstream
Total upstream production in the reported quarter was 699,700 barrels of oil equivalent per day (Boe/d), up 6.7% from the prior-year level of 655,500 Boe/d. This rise in output was owing to better Syncrude and Oil Sands production. Evidently, this upstream unit recorded operating earnings of C$250 million against the loss of C$51 million in the prior-year quarter.
Output from Syncrude operations scaled down to 113,700 Bbl/d from 119,500 Bbl/d a year earlier.
Fort Hills production came in at 45,300 barrels per day (BPD) in the quarter, lower than 47,300 BPD registered in the year-ago period.
Oil Sands operations volume was 470,100 Bbl/d compared with 396,300 Bbl/d in the year-earlier quarter. Operating costs per barrel decreased to C$23.85 in the quarter under review from C$25.8 in the corresponding period of 2020. Upgrader utilization increased to 96% from 93% in the comparable quarter of last year.
Suncor Energy’s Exploration and Production segment (consisting of International, Offshore and Natural Gas segments) produced 84,000 Boe/d compared with 101,800 Boe/d in the prior-year quarter. Results were impacted by the absence of Terra Nova production, planned turnaround activities at Buzzard and natural production declines.
Downstream
Operating earnings from the downstream unit rose to C$361 million from the year-ago figure of C$145 million, attributable to improved margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 463,300 Bbl/d from the prior-year level of 438,800 Bbl/d.
Crude throughput came in at 325,300 Bbl/d in the second quarter compared with 350,400 Bbl/d in the year-ago period. Also, refinery utilization was 70%.
Expenses
Total expenses in the reported quarter climbed to C$8.01 billion from C$5.3 billion in the year-earlier period. This downtrend is mainly led by higher costs related to the purchases of crude oil and products as well as a rise in operating, selling and general costs.
Financials
Cash flow from operating activities summed C$2.086 billion in the second quarter, up from the prior-year figure of C$768 million. The company incurred capital expenditure worth C$1.31billion in the quarter under discussion. As of Jun 30, 2021, Suncor Energy had cash and cash equivalents worth C$2.04 billion and a total long-term debt of C$14.71 billion. Its total debt to total capital was 28.9%. During the quarter under review, the company distributed $315 million as dividends.
Guidance
For the full year, this Alberta-based integrated player’s Fort Hills production guidance was lowered from 65,000-85,000 BPD to 45,000-55,000 BPD to reflect extra work necessary to preserve slope integrity on the mine's south side. As a result, the cash operating expenses per barrel at Fort Hills were increased from $25-$29 to $37-$42.
Suncor Energy will continue to focus on strengthening its financial position. The company deployed about two-thirds of its free cash flow to debt repayment and one-third to share repurchases.
The company also adjusted its capital expenditure allocation across business sectors to indicate decreased spending on East Coast Canada projects in E&P, offset by an increase in the scope of refinery turnaround efforts in R&M. Upstream E&P capital expenditure forecast is cut from $350-$450 million range to $300-$400 million range while Downstream capex view is increased to $750-$850 million from the prior projection of $700-$800 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Suncor Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 this revision 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.