Suncor Energy Inc. (SU): Is This Oil Stock Still a Buy?

Page 1 of 2

Suncor Energy Inc. (NYSE:SU) operates as an integrated energy company. Based in Alberta, the company’s operations include oil sands development and upgrades, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand.

A Safe Way to Invest in Canadian Oil SandsSuncor Energy Inc. (NYSE:SU)’s recent fourth quarter earnings were disappointing, as revenue decreased compared to the previous year’s quarter. The company posted a net loss in the recent quarter. Suncor Energy Inc. (NYSE:SU)’s stock has been falling since it hit a high of $34.50 in February. Recently, the stock was trading at the $28 per-share level. Let’s see some of the issues related to Suncor Energy Inc. (NYSE:SU).

Recent issues:  Sale of Alberta gas fields

Recently, Suncor Energy Inc. (NYSE:SU) announced its plan to sell its gas fields located mostly in southern and central Alberta for C$1 billion ($980 million) to Centrica and Qatar Petroleum. Centrica will operate the assets and produce about 250 million cubic feet of gas a day this year.

According to the agreement, 60% of the assets will be owned by Centrica and 40% by Qatar Petroleum. This announcement is in line with the latest strategy of fiscal discipline at Suncor, which has been described in the later part of the article.

No-go with Voyageur oilsands upgrader

Suncor Energy Inc. (NYSE:SU) has shelved its Voyageur oil sands upgrader project due to changes in market conditions. The project is no longer economical for Suncor. In 4Q 2012, Suncor took about a $1.5 billion write-down on Voyageur.

Disappointing 4Q 2012 results

Suncor operates in four business segments: oil sands, exploration and production (E&P), refining and marketing, and corporate, energy trading, and eliminations.

Operating earnings decreased from C$1.4 billion in Q4 2011 to C$1 billion in Q4 2012. Suncor posted a net loss of C$562 million. The oil-sands segment contributed majorly toward the loss.

Cash flow from operations decreased to C$2.2 billion in Q4 2012 from C$2.6 billion in Q4 2011. The average production of the oil sands segment is 378,700 barrels per day and the total average production is 556,500 barrels of oil equivalent per day.

Source: Suncor Q4 2012 report

Suncor’s stock analysis

Suncor’s stock has a P/E of approximately 15.6, which is higher than the 8.7 P/E ratio of its direct competitor, Imperial Oil Limited (NYSEMKT:IMO). Suncor’s operating margin is better at around 0.2 versus 0.1 for Imperial Oil Limited (NYSEMKT:IMO). When compared with major energy companies such as Exxon Mobil Corporation (NYSE:XOM), Total S.A. (ADR) (NYSE:TOT) and ConocoPhillips (NYSE:COP), Suncor has a greater price-to-earnings ratio.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!