Back to top

Image: Bigstock

Will Suncor (SU) Reverse the Previous Miss in Q1 Earnings?

Read MoreHide Full Article

Suncor Energy Inc. (SU - Free Report) is set to release first-quarter results on May 9. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.31 per share on revenues of $9.2 billion.

Let’s delve into the factors that might have influenced the Canadian energy giant’s results in the March quarter. But it’s worth taking a look at SU’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Calgary, Alberta-based operator performed worse than the consensus mark due to increased costs and operational mishaps. SU had reported earnings per share of 71 cents, below the Zacks Consensus Estimate of 76 cents. However, revenues of $8.9 billion generated by the firm came in 4.2% above the Zacks Consensus Estimate on the back of a considerable gain in realizations and increased refined product sales.

Suncor Energy beat the Zacks Consensus Estimate for earnings just once in the last four quarters and missed in the other three, resulting in a negative earnings surprise of 3.3%, on average. This is depicted in the graph below:
 

Suncor Energy Inc. Price and EPS Surprise

Suncor Energy  Inc. Price and EPS Surprise

Suncor Energy Inc. price-eps-surprise | Suncor Energy Inc. Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has remained the same in the past seven days. The estimated figure indicates a 235.9% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 34.6% increase from the year-ago period.

Factors to Consider

Suncor Energy is expected to have benefited from a surge in oil price. In the October-to-December period, the company’s realized crude price was $82.20 per barrel compared with the year-ago level of $43.48. The uptick is most likely to have continued in the first quarter, with oil revisiting its multi-year highs above $100 following geopolitical tensions and robust demand. This price boost is likely to have buoyed the revenues and cash flows of SU.

On a somewhat bearish note, the increase in Suncor Energy’s costs might have dented the company’s to-be-reported bottom line. SU’s total costs and expenses in the fourth quarter climbed to C$9.1 billion from C$7 billion in the year-earlier period. The upward cost trajectory is likely to have continued in the first quarter due to higher expenses related to the purchases of crude oil and products as well as a rise in operating, selling and general costs.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Suncor is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: SU has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.31 per share each.

Zacks Rank: Suncor currently carries a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for SU, here are some firms that you may want to consider on the basis of our model:

HighPeak Energy, Inc. (HPK - Free Report) has an Earnings ESP of +2.97% and a Zacks Rank #1. The firm is scheduled to release earnings on May 16.

You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2022, HPK has a projected earnings growth rate of 580.3%. Valued at around $2.9 billion, HighPeak Energy has soared around 229.6% in a year.

Blend Labs, Inc. (BLND - Free Report) has an Earnings ESP of +1.92% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 12.

BLND is valued at around $1 billion. For 2022, the company has a projected earnings growth rate of 22.7%. Blend Labs has lost around 79.8% in a year.
    
BioCardia, Inc. (BCDA - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3. The firm is scheduled to release earnings on May 11.

For 2022, BCDA has a projected earnings growth rate of 2.7%. Valued at around $27.2 million, BioCardia has decreased around 52.7% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.