A month has gone by since the last earnings report for Suncor Energy (SU Quick QuoteSU - Free Report) . Shares have added about 0% 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 its 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 2023 operating earnings of $1.01 per share, which beat the Zacks Consensus Estimate of 93 cents. This could be attributed to an increase in Upstream’s Bitumen production.

The bottom line, however, deteriorated from the year-ago quarter’s level of $1.53 due to lower crude oil realizations and a decline in upstream production.

Operating revenues of $9.1 billion beat the Zacks Consensus Estimate by 11.3%.  The top line decreased approximately 15.1% on a year-over-year basis due to a decline in sales in the Upstream and Downstream segments.

The company repurchased shares worth approximately C$874 million during the reported quarter.

Segmental Performance

Upstream: Total production in this segment decreased 3.1% year over year to 742,100 barrels of oil equivalent per day (boe/d) from 766,100 boe/d in the prior-year quarter. This was due to unanticipated maintenance.

The company’s exploration and production volume (international, offshore and natural gas) slipped 16.7% to 67,000 boe/d from 80,400 boe/d a year ago due to natural declines and asset sales.

Adjusted operating earnings came in at C$2.1 billion compared with C$2.95 million in the year-ago quarter.

Operating cost per barrel increased to C$29.60 from C$28.70 in the corresponding period of 2022 due to increased maintenance costs. Upgrader utilization decreased to 93% from 96% a year ago.

Bitumen production increased to 177,300 boe/d from 170,400 boe/d in the prior-year period. Oil sands volumes went down to 497,800 boe/d from 515,300 boe/d a year ago.

Fort Hills reported average first-quarter volumes of 69,200 bpd, lower than the year-ago quarter’s 87,500 bpd. Cash operating costs per barrel increased to $41.40 from $29.00 in the prior-year period. This was due to higher expenditures associated with increasing mining activities.

Downstream: Adjusted operating earnings from the unit decreased to C$998 million from the year-ago quarter’s figure of C$1.4 billion.  This deterioration was due to a FIFO inventory valuation loss in the reported period.

Refined product sales totaled 514,800 bpd, down from the prior-year quarter’s level of 551,900 bpd.  This can be attributed to a decrease in refinery crude throughput at the Commerce City refinery in the reported quarter.

Crude throughput came in at 367,700 bpd compared with 436,500 bpd in the year-ago period.  Refinery utilization was 79% compared with 94% a year ago.

Financial Position

Total expenses increased 0.4% to C$9.5 billion from that recorded in the prior-year quarter.

Cash flow from operating activities came in at C$1.039 billion, down from the prior-year quarter’s C$3.072 billion. Suncor Energy incurred capital expenditures worth C$1.1 billion in the first quarter of 2023.

As of Mar 31, 2023, the company had cash and cash equivalents worth C$1.1 billion, and long-term debt of C$9.8 billion. Its total debt to total capital was 19.7%.

Guidance

SU expects production in the range of 740,000-770,000 boe/d for 2023.

Oil Sands operations yield is anticipated in the band of 385,000-425,000 bbls/d, while the same for Fort Hills is projected at 85,000-95,000 bbls/d. Syncrude, and Exploration and Production operations yield is expected in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.

The company also projects a full-year capital expenditure of C$5.4-C$5.8 billion.




 

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

The consensus estimate has shifted -16.13% due to these changes.

VGM Scores

Currently, Suncor Energy has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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

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 is part of the Zacks Oil and Gas - Integrated - Canadian industry. Over the past month, Imperial Oil (IMO Quick QuoteIMO - Free Report) , a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended March 2023 more than a month ago.

Imperial Oil reported revenues of $8.96 billion in the last reported quarter, representing a year-over-year change of -10.5%. EPS of $1.58 for the same period compares with $1.38 a year ago.

Imperial Oil is expected to post earnings of $1.34 per share for the current quarter, representing a year-over-year change of -52.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.7%.

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 B.