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Why Is Suncor Energy (SU) Up 22.2% 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 added about 22.2% in that time frame, outperforming 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 catalysts.
Suncor Energy Q1 Earnings Beat
Suncor Energy reported first-quarter 2022 operating earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.31. This earnings beat could be credited to crude oil and refined product markets gaining strength in the reported quarter, prompted by a surge in energy prices.
Moreover, SU’s bottom line improved from a profit of 39 cents in the year-ago period due to a considerable gain in realizations and increased refined product sales.
Quarterly operating revenues of $10.6 billion beat the Zacks Consensus Estimate by 16% and increased by approximately 56% year over year.
In good news for investors, Suncor expanded its repurchase program to 10% of shares outstanding (from 7% before).
Segment Performance
Upstream: Suncor’s total upstream production decreased by 2.5% year over year to 766,100 barrels of oil equivalent per day (boe/d). The primary reason for this decline was the lower output from the company’s exploration and production assets (consisting of international, offshore and natural gas), which slipped to 80,400 boe/d from 95,300 boe/d a year ago.
However, significantly higher crude price realizations meant that Suncor’s upstream segment recorded adjusted operating earnings of C$2.95 billion compared with C$703 million in the prior-year quarter.
Operating costs per barrel increased to C$28.70 in the quarter under review from C$23.30 in the corresponding period of 2021. Upgrader utilization increased to 94% from 92% in the comparable quarter of the last year.
Bitumen production dropped marginally from 170,700 boe/d to 170,400 boe/d.
Oil sands volumes in the reported quarter went down to 515,300 boe/d from 519,000 boe/d in the year-ago quarter.
During the quarter, the output from Syncrude operations fell to 186,800 barrels per day (bpd) from 193,500 bpd a year earlier.
Meanwhile, Fort Hills reported average first-quarter volumes of 87,500 bpd, greater than the 51,200 bpd registered in the first quarter of 2021.
Downstream: Adjusted operating earnings from the downstream unit rose to C$1.4 billion from the year-ago figure of C$943 million, attributable to expanded margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 551,900 bpd from the prior-year quarter figure of 548,100 bpd.
Crude throughput came in at 436,500 bpd in the first quarter of 2022, up from 428,400 bpd in the year-ago period. Moreover, refinery utilization was 94% compared with 92% a year ago.
Financial Position
Total expenses in the reported quarter climbed to C$9.65 billion from C$7.52 billion in the year-earlier period. This uptick was mainly caused by higher costs related to the purchases of crude oil and products, a rise in operating, selling and general costs and a small hike in financial expenses and exploration costs.
Suncor reported first-quarter cash flow from operating activities of C$3 billion, surging from the prior year’s C$2.34 billion. The company incurred capital expenditure worth C$1.01 billion in the quarter under discussion.
As of Mar 31, 2022, SU had cash and cash equivalents worth C$2.6 billion and carried total long-term debt of C$13.86 billion. Its total debt to total capital was 26.6%.
In the first quarter, the company distributed C$601 billion in dividends and paid out C$827 million in the form of share repurchases.
Suncor’s increased cash flows allowed it to reduce net debt by C$728 million.
Guidance
Suncor retained its guidance for production in the range of 750,000-790,000 boe/d in 2022 and refined product sales in the band of 550,000-580,000 bpd.
The company’s Fort Hills full-year production guidance stands in the range of 85,000-100,000 bpd, while for Syncrude it’s in the 175,000-190,000 bpd range.
The company now anticipates cash operating costs in its oil sands operations between C$27 and C$30 per barrel.
Suncor expects to achieve its earlier capital spending of around C$4.7 billion this year.
Finally, in the current business environment, the company expects to achieve the lower end of its 2025-targeted net debt range during the second half of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 12.72% due to these changes.
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. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Suncor Energy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Suncor Energy is part of the Zacks Oil and Gas - Integrated - Canadian industry. Over the past month, Imperial Oil (IMO - Free Report) , a stock from the same industry, has gained 18.6%. The company reported its results for the quarter ended March 2022 more than a month ago.
Imperial Oil reported revenues of $10.02 billion in the last reported quarter, representing a year-over-year change of +81.2%. EPS of $1.38 for the same period compares with $0.42 a year ago.
For the current quarter, Imperial Oil is expected to post earnings of $2.18 per share, indicating a change of +431.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.6% over the last 30 days.
Imperial Oil has a Zacks Rank #1 (Strong Buy) 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 22.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Suncor Energy (SU - Free Report) . Shares have added about 22.2% in that time frame, outperforming 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 catalysts.
Suncor Energy Q1 Earnings Beat
Suncor Energy reported first-quarter 2022 operating earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.31. This earnings beat could be credited to crude oil and refined product markets gaining strength in the reported quarter, prompted by a surge in energy prices.
Moreover, SU’s bottom line improved from a profit of 39 cents in the year-ago period due to a considerable gain in realizations and increased refined product sales.
Quarterly operating revenues of $10.6 billion beat the Zacks Consensus Estimate by 16% and increased by approximately 56% year over year.
In good news for investors, Suncor expanded its repurchase program to 10% of shares outstanding (from 7% before).
Segment Performance
Upstream: Suncor’s total upstream production decreased by 2.5% year over year to 766,100 barrels of oil equivalent per day (boe/d). The primary reason for this decline was the lower output from the company’s exploration and production assets (consisting of international, offshore and natural gas), which slipped to 80,400 boe/d from 95,300 boe/d a year ago.
However, significantly higher crude price realizations meant that Suncor’s upstream segment recorded adjusted operating earnings of C$2.95 billion compared with C$703 million in the prior-year quarter.
Operating costs per barrel increased to C$28.70 in the quarter under review from C$23.30 in the corresponding period of 2021. Upgrader utilization increased to 94% from 92% in the comparable quarter of the last year.
Bitumen production dropped marginally from 170,700 boe/d to 170,400 boe/d.
Oil sands volumes in the reported quarter went down to 515,300 boe/d from 519,000 boe/d in the year-ago quarter.
During the quarter, the output from Syncrude operations fell to 186,800 barrels per day (bpd) from 193,500 bpd a year earlier.
Meanwhile, Fort Hills reported average first-quarter volumes of 87,500 bpd, greater than the 51,200 bpd registered in the first quarter of 2021.
Downstream: Adjusted operating earnings from the downstream unit rose to C$1.4 billion from the year-ago figure of C$943 million, attributable to expanded margins and strong refined product sales. Suncor Energy recorded impressive refined product sales in the quarter under consideration, which increased to 551,900 bpd from the prior-year quarter figure of 548,100 bpd.
Crude throughput came in at 436,500 bpd in the first quarter of 2022, up from 428,400 bpd in the year-ago period. Moreover, refinery utilization was 94% compared with 92% a year ago.
Financial Position
Total expenses in the reported quarter climbed to C$9.65 billion from C$7.52 billion in the year-earlier period. This uptick was mainly caused by higher costs related to the purchases of crude oil and products, a rise in operating, selling and general costs and a small hike in financial expenses and exploration costs.
Suncor reported first-quarter cash flow from operating activities of C$3 billion, surging from the prior year’s C$2.34 billion. The company incurred capital expenditure worth C$1.01 billion in the quarter under discussion.
As of Mar 31, 2022, SU had cash and cash equivalents worth C$2.6 billion and carried total long-term debt of C$13.86 billion. Its total debt to total capital was 26.6%.
In the first quarter, the company distributed C$601 billion in dividends and paid out C$827 million in the form of share repurchases.
Suncor’s increased cash flows allowed it to reduce net debt by C$728 million.
Guidance
Suncor retained its guidance for production in the range of 750,000-790,000 boe/d in 2022 and refined product sales in the band of 550,000-580,000 bpd.
The company’s Fort Hills full-year production guidance stands in the range of 85,000-100,000 bpd, while for Syncrude it’s in the 175,000-190,000 bpd range.
The company now anticipates cash operating costs in its oil sands operations between C$27 and C$30 per barrel.
Suncor expects to achieve its earlier capital spending of around C$4.7 billion this year.
Finally, in the current business environment, the company expects to achieve the lower end of its 2025-targeted net debt range during the second half of 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 12.72% due to these changes.
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. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Suncor Energy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Suncor Energy is part of the Zacks Oil and Gas - Integrated - Canadian industry. Over the past month, Imperial Oil (IMO - Free Report) , a stock from the same industry, has gained 18.6%. The company reported its results for the quarter ended March 2022 more than a month ago.
Imperial Oil reported revenues of $10.02 billion in the last reported quarter, representing a year-over-year change of +81.2%. EPS of $1.38 for the same period compares with $0.42 a year ago.
For the current quarter, Imperial Oil is expected to post earnings of $2.18 per share, indicating a change of +431.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +5.6% over the last 30 days.
Imperial Oil has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.