Tuesday, November 16, 2010

Suncor Energy Inc 2

The stock I had been following was Petro-Can. Petro-Can, this was recently (2009) bought out by Suncor Energy Inc (TSX-SU). Petro-Can makes up 40% of the current Suncor company and the old Suncor company makes up the other 60%.

First, I looked at the Insider Trading report. What I find is that there has been $2.1M of Insider Buying and $7.7M of Insider Selling, for a net of Insider Selling of $5.6M. Quite a lot of selling, but this does not tell us much. The other thing that I noticed is that Insider (expect for directors) have lots more stock options than share. This is not great, but unfortunately is typical of a lot of companies.

When I look at the P/E ratio, I get a current one of 22.8, which is a little high. However, the 5 year median low P/E ratio is 18.2 and the 5 year median high is 37.2. On a relative basis, the P/E is not high. When I look at the Graham Price, I get one of $27.96 for 2010. The current stock price of $34.67 is some 24% higher than the Graham Price. Over the 3 past years, the Graham price has been at or below the Graham price. However, this has not been the case this year. I also note that since February, the stock has been trading in a fairly narrow band between $30 and $35.

When I look at the dividend yield, I note that the current one of 1.2% is better than the 5 year average of just .6%. If the dividends grow at the current 10 year growth rate of 18.9%, you would be earning 6.5% on a current investment in stock in 10 years time. This is the dividend growth potential of a stock and it is another way of assessing the dividend yield on a stock. This company is on one of the dividend lists that I follow of Dividend Achievers .

When I look at the Price/Book Value ratio, I find that it is current at 1.52. This is a low ratio and it is also only 77% of the 10 year average of 1.97. So, on a relative basis, the stock price seems good when looking at the P/E ratio, the dividend yield and the P/B Ratio. However, it is higher than the Graham price.

When I look at analysts recommendations, I find ones of Strong Buy, Buy and Hold. Analysts seem pretty evenly split overall on these recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The recommendations of Buy come with a 12 months stock price of $40.

The analysts that like this stock think that the merger with Petro-Can was a great idea. Analysts with a hold recommendation think that the company has underperformed in the latest stock market recovery. Everyone thinks it will do well in the long term. This company has a Wikipedia page at Suncor Energy. There is an interest video on the oil business at Bob Harrison.

Suncor Energy Inc. is an integrated energy company. Suncor's operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. Suncor is also developing a growing renewable energy portfolio. Their international and offshore business includes operations in the North Sea (United Kingdom, Netherlands and Norway) and the East Coast of Canada. They are also in Libya, Syria and Trinidad and Tobago. Its web site is here Suncor. See my spreadsheet at su.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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