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Suncor Energy (SU) Down 7% Since Last Earnings Report: Can It Rebound?
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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 7% 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 catalysts.
Suncor Energy Q3 Earnings Fall Y/Y, Sales Beat Estimates
Suncor Energyreported third-quarter 2023 adjusted operating earnings of C$1.52 per share, down from the prior-year quarter's level of C$3.84. This could be attributed to a decrease in crude oil price realizations and a decline in upstream production, reflecting a weaker business environment in the reported quarter.
Operating revenues of $9.4 billion beat the Zacks Consensus Estimate by 14.6% due to an increase in upgrader utilization. The top line decreased approximately 18.3% on a year-over-year basis due to a decline in sales in the Upstream and Downstream segments.
Segmental Performance
Upstream:Total production in this segment decreased 4.7% year over year to 690,500 barrels of oil equivalent per day (boe/d) from 724,100 boe/d. The figure also missed our projection of 749,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 43.1% to 44,400 boe/d from 78,100 boe/d a year ago due to international asset divestments.
Adjusted operating earnings totaled C$2 billion compared with C$2.6 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.2 from C$29.7 in the corresponding period of 2022 due to lower natural gas prices and other commodity costs. Upgrader utilization increased to 88% from 75% a year ago.
Bitumen production decreased to 176,800 boe/d from 240,900 boe/d in the prior-year period. Oil sands volumes went up to 469,300 boe/d from 405,100 boe/d a year ago.
Fort Hills reported an average third-quarter volume of 86,100 bpd, lower than the year-ago quarter’s level of 95,800 bpd. However, the figure beat our projection of 84,900 bpd.
Cash operating cost per barrel increased to C$43.4 from C$25.65 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$38.64.
Downstream:Adjusted operating earnings from the unit increased to C$1.3 billion from the year-ago quarter’s reported figure of C$755 million. This was due to an increase in refining and marketing benchmark crack spreads and FIFO inventory valuation gain in the reported period.
Refined product sales totaled 547,100 bpd, down from the prior-year quarter’s level of 577,300 bpd. Crude throughput totaled 463,200 bpd compared with 408,800 bpd in the year-ago period. Refinery utilization was 99% compared with 88% a year ago.
Financial Position
Total expenses decreased 32.3% to C$10.5 billion from that recorded in the prior-year quarter. The figure was higher than our estimate of C$8.7 billion.
Cash flow from operating activities amounted to C$4.1 billion, down from the prior-year quarter’s level of C$4.4 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the third quarter of 2023.
As of Sep 30, 2023, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$9.8 billion. Its total debt to total capital was 19%.
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 in the 85,000-95,000 bbls/d range. Operations yield for Syncrude and Exploration and Production is anticipated in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also expects capital expenditure in the band of C$5.4-C$5.8 billion for full-year 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -11.46% 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 20% 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.
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Suncor Energy (SU) Down 7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Suncor Energy (SU - Free Report) . Shares have lost about 7% 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 catalysts.
Suncor Energy Q3 Earnings Fall Y/Y, Sales Beat Estimates
Suncor Energy reported third-quarter 2023 adjusted operating earnings of C$1.52 per share, down from the prior-year quarter's level of C$3.84. This could be attributed to a decrease in crude oil price realizations and a decline in upstream production, reflecting a weaker business environment in the reported quarter.
Operating revenues of $9.4 billion beat the Zacks Consensus Estimate by 14.6% due to an increase in upgrader utilization. The top line decreased approximately 18.3% on a year-over-year basis due to a decline in sales in the Upstream and Downstream segments.
Segmental Performance
Upstream: Total production in this segment decreased 4.7% year over year to 690,500 barrels of oil equivalent per day (boe/d) from 724,100 boe/d. The figure also missed our projection of 749,300 boe/d.
The company’s exploration and production volume (international, offshore and natural gas) slipped 43.1% to 44,400 boe/d from 78,100 boe/d a year ago due to international asset divestments.
Adjusted operating earnings totaled C$2 billion compared with C$2.6 billion in the year-ago quarter.
Operating cost per barrel decreased to C$29.2 from C$29.7 in the corresponding period of 2022 due to lower natural gas prices and other commodity costs. Upgrader utilization increased to 88% from 75% a year ago.
Bitumen production decreased to 176,800 boe/d from 240,900 boe/d in the prior-year period. Oil sands volumes went up to 469,300 boe/d from 405,100 boe/d a year ago.
Fort Hills reported an average third-quarter volume of 86,100 bpd, lower than the year-ago quarter’s level of 95,800 bpd. However, the figure beat our projection of 84,900 bpd.
Cash operating cost per barrel increased to C$43.4 from C$25.65 in the prior-year period. This was due to higher expenditures associated with increasing mining activities. The figure beat our projection of C$38.64.
Downstream: Adjusted operating earnings from the unit increased to C$1.3 billion from the year-ago quarter’s reported figure of C$755 million. This was due to an increase in refining and marketing benchmark crack spreads and FIFO inventory valuation gain in the reported period.
Refined product sales totaled 547,100 bpd, down from the prior-year quarter’s level of 577,300 bpd. Crude throughput totaled 463,200 bpd compared with 408,800 bpd in the year-ago period. Refinery utilization was 99% compared with 88% a year ago.
Financial Position
Total expenses decreased 32.3% to C$10.5 billion from that recorded in the prior-year quarter. The figure was higher than our estimate of C$8.7 billion.
Cash flow from operating activities amounted to C$4.1 billion, down from the prior-year quarter’s level of C$4.4 billion. Suncor Energy incurred capital expenditures worth C$1.6 billion in the third quarter of 2023.
As of Sep 30, 2023, the company had cash and cash equivalents of C$2.4 billion and long-term debt of C$9.8 billion. Its total debt to total capital was 19%.
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 in the 85,000-95,000 bbls/d range. Operations yield for Syncrude and Exploration and Production is anticipated in the range of 175,000-190,000 bpd and 50,000-60,000 boe/d, respectively.
The company also expects capital expenditure in the band of C$5.4-C$5.8 billion for full-year 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -11.46% 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 20% 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.