Suncor Energy Inc

On my other blog I am today writing about the Bond Market bubble...continue...

I do not own this stock of Suncor Energy Inc. (TSX-SU, NYSE-SU). I have always perceived that resource investing was very risky and have done very little investing in this section. I had held some resource stock at various times, but always held them for short periods. Basically make a profit and getting out. I never held any resource stock for more than a few years.

I know that a lot of the TSX market is in resources, so I do follow some resource stock. I have followed this stock since 2008. At that time, I started to follow, Petro-Canada. However in 2009, Petro-Canada merged with Suncor. So my spreadsheet follows Petro-Canada into Suncor. This is a problem when following any company, or owning any company over the long term. They can merge with other companies, be bought out, change their name (and what they do) and, of course, go out of business.

This is an energy company this is paying quite low dividends that increase very nicely. (Any energy company that pays good dividends would have to vary dividends depending on the price of oil and gas.) The 5 year median dividend yield is just 1.04%. The dividend has often been under 1%. The current dividend is 1.57%.

Dividend increases are very good. The 5 and 10 year growth in dividend is at 25% and 23% per year. Latest increase in 2012 is a bit lower at 18.2%. As would be expected the Dividend Payout Ratios and quite good for this company. The 5 year median DPR for earnings is 16.1% and the 5 year median DPR for cash flow is 6.9%.

The total return over the past 5 and 10 years for this stock has not been great. The 5 year total return is a negative 1.99% per year. Dividend returns was 1.05% per year and the capital loss was at 3.04% per year. The 10 year total return was better at 7.92% per year, with 0.96% per year from dividends and a capital gain of 6.96% per year.

The outstanding shares have decreased marginally over the past 5 and 10 years. Over the past 5 and 10 years, outstanding shares are down 0.4% per year and 0.7% per year, respectively. Shares have increased due to stock options and DRIP and have decreased because of share buy backs.

Looking at the financials for 2011, over the past 5 years revenue was down by 3.1% per year and revenue per share down by 2.7% per year. Over the past 10 years revenue is up by 6.2% per year and revenue per share up by 7% per year. Revenue is expected to be up around 1.4% for 2012.

The financials for 2011 show that Earnings per Share is up very nicely by 20% and 18% per year over the past 5 and 10 years. It is expected that EPS will be up by some 24% for 2012 but only by 4% for 2013.

As of the 2011 financials, book value is up by 8.6% and 12.6% per year over the past 5 and 10 years. The book value is up by some 7.5% to the 3rd quarter of 2012.

The Return on Equity for the financial year of 2011 is 11.9% and the 5 year median ROE is also 11.9%. ROE is up by 11.9% for the 12 months ending in September 30, 2012. The ROE on comprehensive income for the financial year of 2011 was 10.9% and for the 12 months ending in September 30, 2012 also at 10.9%. The ROE for net income and comprehensive income is close.

The current Liquidity Ratio is a little low at 1.37, but the company has generally had good cash flow. The 5 year median Liquidity Ratio is a little low at 1.23. Note, however, for oil and gas companies, the cash flow can fluctuate depending on the price of oil and gas. The current Debt Ratio is quite good at 2.07. This 5 year median Debt Ratio is also good at 2.04.

The thing is with this energy company and all energy companies are that they are heavily tied to the price of oil and/or gas or both. No one knows when the economic situation will improve worldwide. I do not see oil and gas prices taking off until the Western World does something to improve their debt overhang situation. So far all countries have just kick the can down the road. They have made no effort to deal with their debt.

One reason to invest in an oil and gas company is that they are a big part of the TSX. One reason not to investment in resource companies is that they are risky investments and I have never felt that energy companies were long term investments.

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.