Wednesday, July 5, 2017

Suncor Energy Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Energy. Long term investors seem to have done well with this stock. Price might still be relatively reasonable. See my spreadsheet on Suncor Energy Inc.

I do not own this stock of Suncor Energy Inc. (TSX-SU, NYSE-SU). I started following this stock as Petro-Canada (TSX-PCA). It was on Mike Higgs' list of dividend growth stocks. This was also a key stock for the Investment Reporter. My spreadsheet follows PCA into SU. PCA and SU merged in 2009. I also note that a number of Canadian Equity Funds have this stock listed in their top 10 holdings.

This stock currently has a very high dividend at 3.38%. Recently they have had a hard time covering the dividend with EPS. There was an earrings loss in 2015 and dividend coverage was 430%, which means they paid out for more than they earned. However, the 5 year Dividend Payout Ratio is 89%, which is not that bad. Analysts expect dividends to be covered handily in 2017 with an estimate DPR of 60%.

Shareholders have done well lately with this stock. Over the past 5 and 10 years long time shareholders would have made 10.92% and 4.72% per year total return. Because I have the data, I also looked at 15 and 20 year total return. These are at 8.59% and 10.44% per year. Total return includes capital gains and dividends. It would seem that the 10 year total return is the lowest.

With oil and gas stocks there is a lot of volatility. So, debt ratios are quite important. The Liquidity Ratio for 2016 is 1.36 with a 5 year median of 1.46. If you added in cash flow after dividends, the ratios are much better with a ratio of 1.82 for 2016 and a 5 year median of 2.24. The Debt Ratio for 2016 was 2.01 and this has a 5 year median of 2.05.

Leverage and Debt/Equity Ratios for 2016 are 1.99 and 0.99 with a 5 year median of 1.96 and 0.96. These are good as is the Long Term Debt/Market Cap Ratio for 2016 of 0.22.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.31, 17.98 and 20.65. The 10 year values are 12.94, 16.85 and 21.99. The historical values are 19.93, 26.21 and 30.93. You do not often see the historical ratios higher than the more recent ones. The current P/E Ratio is 17.71 based on a stock price of $37.89 and 2017 EPS estimate of $2.14. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a Graham Price of $36.84. The 10 year low, median and high median Price/Graham Price Ratios are 0.83, 1.01 and 1.28. The current P/GP Ratio is 1.05 based on a stock price of $37.89. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Book Value per Share Ratio is 1.35. The current P/B Ratio is 1.39 based on BV of $45,515M, BVPS of $27.29 and a stock price of $37.89. The current P/B Ratio is some 3% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable but above the median (but not much above the median).

The historical dividend yield is 0.62%. This is because the dividends started out very low and have been increasing. Also, do not forget that my spreadsheet is tracing the company from PCA which merged with SU in 2009. The current dividend is 3.38% based on dividends of $1.28 and a stock price of $37.89. This testing suggests that the stock is relatively cheap.

The 5 year dividend yield is 2.61%. This is still quite a bit lower than the current dividend yield of 3.38%. The current dividend yield at 3.38% is some 29% higher than the 5 year median dividend yield. This still suggests that the stock price is relatively cheap.

The 10 year P/S Ratio is 1.40. The current P/S Ratio is 1.86 based on 2017 Revenue estimate of $33,952M, Revenue per Share of 20.36 and a currently stock price of $37.89. The current P/S Ratio is some 33% higher than the 10 year median P/S Ratio. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform Recommendations. Most of the recommendations are a Buy and consensus recommendation would be a Buy. The 12 months stock price consensus is $47.68. This implies a total return of 29.22% with 3.38% from dividends and 25.84% from capital gains.

Jason Phillips talks about owning this company or Imperial Oil in your portfolio on Motley Fool. Reb123z on Weekly Hub talks about what analysts are saying about this stock. Note this is US coverage and US prices. See what analysts are saying about this stock on Stock Chase.

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 Energy Inc. The mostly like this company.

The last stock I wrote about was about was Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF)... learn more. The next stock I will write about will be Empire Company Ltd (TSX-EMP.A, OTC- EMLAF)... learn more on July 7, 2017 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks July 2017... learn more on July 6, 2017 around 5 pm.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

1 comment:

  1. Hello,

    This is really cool update. You surely investigated the company well. I've been eyeing for investing in company stocks, thanks for giving what to follow in terms of stock!