Tuesday, January 8, 2013

Suncor Energy Inc 2

I do not own this stock of Suncor Energy Inc. (TSX-SU, NYSE-SU). I started to follow Petro-Canada in 2008. However in 2009, Petro-Canada merged with Suncor. So my spreadsheet follows Petro-Canada into Suncor. Energy companies are a large part of the TSX, but I think all resource stocks are rather risky.

According to the insider trading report, there was some $28M of insider selling and net insider selling of $27.2M. (In other words there was a little bit of insider buying.) The problem with a company that give out lots of stock options is that insider look at the options as part of their salaries and cash them in.

Although some insiders do own shares, they all have more options than shares. The CEO owns some $7M in shares and has some $84M of outstanding options. The CFO has some $0.25M in shares, but $15.8M in outstanding options. Suncor has been busy lately in buying backs shares for cancellation.

According to NASDAQ there are 510 institutions that own some 50% of the outstanding shares. In the three months to December 31, 2012, institutions increased their shares by 5%.

The 5 year low, median and high median Price/Earnings Ratios are 9.52, 13.89 and 17.37. The current P/E Ratio is 9.62 based on 2013 EPS of $3.45 and stock price of $33.20. This low P/E ratio suggests that the price is relatively low.

I get a current Graham price of $44.63. The 10 year low, median and high median Price/Graham Price Ratios are 1.07, 137 and 1.68. The current P/GP Ratio is 0.74. This low ratio suggests that the price is relatively low. When the P/GP Ratio is 1.00 or lower, it suggests that the stock price is low.

The 10 year median Price/Book Value per Share is 1.89. The current P/B Ratio is 1.29. This is some 68% of the 10 year median ratio. When the current P/B Ratio is 80% or less of the 10 year ratio, it suggests that the stock price is low, as does this low ratio suggests.

The 5 year median dividend yield is just 1.04% and the current yield of $1.57% is some 50% higher. This current high dividend yield suggests that the current stock price is low.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) The 12 month stock price is $42.70. This implies a total return of 30.18% with 1.57% from dividends and 28.61% from capital gain.

A number of analysts bought up the fact that companies in the oil sands are having a current hard time in getting the oil to market. One mentioned that this stock is inexpensive. In the blog seeking Alpha there is an article called "The Case For Investing In Suncor Energy". See blog. It is a long article and you may want to just skip to The Verdict paragraph at the end. However, the author made some interesting points along the way.

According to the Jags Report blog there were analysts' recommendation changes recently. (Note that a Neutral rating is like a Hold rating. See above for link to what analysts' recommendations mean.)

I would agree that that the stock is on the inexpensive side. There are also problems with getting our oil sands oil to market and also some economic uncertainty because of the overhanging debt problems. However, you make money long term by buying stocks that are relatively cheap.

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 or StockTwits.

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