Over the past 12 months, Suncor Energy Inc. (SU Quick QuoteSU - Free Report) has notably outperformed both the broader Oil-Energy sector (ZS12M) and the Oil & Gas-Canadian Integrated sub-industry (ZSI130M). As illustrated in the chart below, SU delivered a strong 7.7% gain, surpassing the Oil-Energy sector’s 4.1% growth and significantly outperforming the sub-industry’s modest 2.2% rise. This indicates that Suncor stock has shown greater resilience and investor confidence compared with its peers and the overall energy sector throughout the year.

12-Month Stock Performance

Image Source: Zacks Investment Research

Suncor is a prominent Canadian energy company with operations that span the entire process of energy development. It starts by sourcing bitumen from the country’s oil sands, a challenging resource that requires advanced extraction techniques. This raw material is then transformed into synthetic crude, which is further refined into various fuel and petroleum products.

These products are made accessible to the public through Suncor’s widespread chain of fueling stations and convenience stores. Aside from its core refining and retail business, the company is also involved in locating and developing new oil and gas sources, helping secure the future supply. Additionally, Suncor takes part in the energy commodities market, using trading strategies to help stabilize earnings amid changing market conditions.

By combining multiple aspects of the energy industry, from extraction and refining to retail and trading, Suncor has developed a well-integrated and adaptive business structure. This approach allows the company to remain profitable and competitive, even as the energy landscape continues to shift.

Let us examine the key factors that have contributed to Suncor's strong performance over the past 12 months and consider whether this upward trend is likely to continue in the future.

Drivers Fueling SU's Surge

Record Operational Performance and Production Growth: Suncor achieved record second-quarter and first-half upstream production of 808,000 barrels and 831,000 barrels per day, respectively. This demonstrates superior operational execution and asset reliability. Furthermore, refinery throughput and refined product sales also hit record levels, indicating strength across the entire integrated value chain. This consistent volume growth is a primary driver of cash flow generation and underpins the company's financial resilience.

Exceptional Capital Discipline and Guidance Reduction: The company successfully reduced its full-year 2025 capital expenditure guidance by C$400 million, lowering the range to C$5.7-C$5.9 billion. This reduction is structural, stemming from outperformance on major projects and turnarounds, not deferrals. It reflects a deep cultural focus on capital efficiency, meaning more free cash flow is available for shareholder returns without sacrificing growth or maintenance.

Powerful Integrated Business Model: The company's unique structure, encompassing oil sands production, upgrading, refining and retail, provides a natural hedge against commodity price volatility. In the second quarter, this model helped mitigate over half of the negative financial impact from an C$8 drop in WTI prices. Stronger refining margins and improved synthetic crude oil pricing captured in the downstream segment offset upstream headwinds, demonstrating the model's value in delivering stable, high-quality cash flows.

Industry-Leading Shareholder Returns: Suncor returned a substantial C$1.45 billion to its shareholders in the second quarter of 2025 through dividends (C$700 million) and share repurchases (C$750 million). This commitment is reliable and significant, year-to-date buybacks are nearly double those of its nearest oil sands competitor. Since 2023, Suncor has returned C$13.6 billion, representing 22% of its average market cap, showcasing a powerful shareholder return proposition.

Successful Execution of Major Turnarounds and Projects: The company completed all planned major maintenance and project activities safely and ahead of schedule, notably the complex Upgrader 1 coke drum replacement project, which finished 24 days early and C$165 million under budget. This world-class execution minimizes downtime, reduces costs and enhances future reliability. This also directly contributed to the reduced capital guidance and instilled confidence in management's ability to deliver on its commitments.

Downside Risks in Suncor’s Path

Significant Exposure to Commodity Price Volatility: Despite its integrated model, Suncor's financial results remain heavily influenced by fluctuating crude oil prices. The second quarter of 2025 saw a notable year-over-year decline in adjusted operating earnings (from C$1.63 billion to C$873 million) and adjusted funds from operations (from C$3.4 billion to C$2.69 billion), primarily due to lower benchmark pricing. This inherent volatility can lead to unpredictable earnings and cash flows, making the stock susceptible to macroeconomic and geopolitical factors beyond its control.

High Capital Intensity and Sustaining Capital Requirements: Even with the reduced guidance, Suncor's business remains highly capital intensive, with a 2025 budget of C$5.7-C$5.9 billion. A substantial portion of this is sustaining and maintenance capital (C$975 million in the second quarter alone) required just to maintain existing production and refining levels. This high ongoing capital demand limits the amount of cash that can be returned to its shareholders and requires continuous disciplined execution to avoid cost inflation.

Execution and Complexity Risks in Major Projects: While recent projects were executed flawlessly, the company's operations involve extremely complex, multi-billion-dollar projects and turnarounds (e.g., coke drum replacements, mine extensions). Any future failure in planning, execution or timing of such large-scale activities could lead to significant cost overruns, extended production downtime and negative impacts on financial results. The sheer scale and technical difficulty of these projects always carry inherent operational risk.

Dependence on Specific Refining Market Dynamics: The strong downstream performance is partially reliant on favorable refining cracks, particularly for diesel. The company acknowledged that these positive margins are supported by temporary factors, like offline renewable capacity and refinery closures. A normalization of these market conditions or a shift in product demand could pressure refining margins, reducing the effectiveness of the integrated hedge and impacting overall profitability.

Inherent Operational Risks in Mining and Upgrading: Suncor's core oil sands operations involve large-scale mining, tailings management and complex upgrading processes. These activities carry inherent risks such as geological challenges (as historically encountered at Fort Hills), equipment failures or unplanned outages. Any significant operational incident could lead to production shortfalls, increased costs and reputational damage, adversely affecting financial results.

Suncor: The Final Word

SU displays impressive strengths, including record-breaking production, disciplined capital management and a robust integrated business model that cushions against commodity price swings. Its consistent operational excellence, reduced capital guidance and industry-leading shareholder returns further underscore strong execution and financial resilience.

However, the company remains vulnerable to crude oil price volatility, high capital intensity and complex project execution risks, which could strain future cash flows and profitability. Additionally, its downstream performance depends on refining market conditions that may not be sustainable in the long term and operational risks inherent in oil sands mining present ongoing challenges.

Given this mix of strengths and potential challenges, investors should wait for a more opportune entry point instead of adding this Calgary-based integrated oil and gas stock to their portfolios.

SU's Zacks Rank & Key Picks

Currently, SU has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Repsol (REPYY Quick QuoteREPYY - Free Report) , Par Pacific Holdings, Inc. (PARR Quick QuotePARR - Free Report) and Vitesse Energy, Inc. (VTS Quick QuoteVTS - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Repsol is a global energy company known for its integrated operations spanning exploration, production, refining and marketing of oil and gas. It actively pursues innovation and sustainability initiatives to transition toward cleaner energy solutions while maintaining a strong presence in key international markets. Repsol is valued at $19.34 billion.  

Par Pacific Holdings is an energy and infrastructure company with operations in the Pacific Northwest, the Rockies and Hawaii. The company's business is organized into three segments: refining, logistics and retail. Par Pacific is valued at $1.72 billion.

Vitesse Energy specializes in providing fluid transfer and control products for the energy sector, offering innovative solutions to optimize performance and reliability. The company serves a diverse customer base in oil and gas, industrial and renewable energy markets. Vitesse Energy is valued at $986.19 million.