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.
What I noticed on the spreadsheet was that dividend growth has been quite good for a number of year as growth has been over 15% per year. See Dividend Growth (Div. Gth.) in the chart below. The other thing is the low Liquidity Ratios. The company will depend on cash flows to adequately cover current liabilities.
The dividend yield has been low to moderate with moderate yields starting in 2009. This is when PCA and Suncor merged. The current yield is 2.67% with 5, 10 and historical yields at 3.09%, 1.89% and 0.64%. As mentioned above dividend growth has been good.
The Dividend Payout Ratio for 2017 was 48% with 5 year coverage at 89%. The DPR for CFPS is 23% with 5 year coverage at 20%. Both these ratios are good so they can cover their dividends. Analysts estimates over the next 3 years show they expect this positive coverage to continue.
The Liquidity Ratio for 2017 is low at 1.00 as is the 5 year median at 1.39. The Liquidity Ratio for the first quarter at 0.89 is below 1.00 and means that current assets cannot cover current liabilities. The company relies on cash cover to properly cover current liabilities.
The Debt Ratio at 2.03 is good as is the 5 year median also at 2.03. I like this ratio to be 1.50 or above. The Leverage and Debt/Equity Ratios are also good at 1.97 and 0.97 with 5 year median ratios at 1.96 and 0.96. For these ratios any ratios below 2.00 and 1.00 are good.
The Total Return per year is show below for years of 5 to 22. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
As you can see from the chart below, this company has done quite well for its shareholders over most time periods I have covered. The longer term of some 20 and 22 years is quite good.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 20.68% | 9.93% | 7.13% | 2.80% |
| 10 | 22.92% | 2.55% | 0.97% | 1.58% |
| 15 | 22.30% | 7.49% | 6.06% | 1.44% |
| 20 | 18.83% | 9.15% | 7.86% | 1.29% |
| 21-22 | 19.34% | 10.99% | 9.63% | 1.36% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.63, 15.44 and 17.25. The corresponding 10 year ratios are 12.10, 15.58 and 19.01. The corresponding historical ratios are 18.57, 23.89 and 29.58. It is interesting that over the longest term we have the highest ratios. The current P/E Ratio is 18.58 based on a stock price of $53.88 and 2018 EPS Ratio of $2.90. This stock price testing suggests that the stock price maybe relatively reasonable but above the median.
I get a Graham Price of $42.62. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 0.97 and 1.18. The current P/GP Ratio is 1.26 based on a stock price of $53.88. This stock price testing suggests that the stock price is relatively expensive. However, on an absolute basis, a P/GP Ratio of 1.26 is not that high.
I get a 10 year median Price/Book Value per Share of 1.35. The current P/B Ratio is 1.94 based on a stock price of $53.88, Book Value of $45,483M, Book Value of $27.84. The current ratio is some 43% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 0.64%. The current dividend yield is 2.67% based on dividends of $1.44 and a stock price of $53.88. This is some 317% above the historical median yield. The 5 and 10 year dividend yield median are 3.09% and 1.89%. The current yield is some 41% above the 10 year yield and some 13% below the 5 year median yield. By this measure the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.42. The current P/S Ratio is 2.25 based on 2018 Revenue estimate of $39,106M, Revenue per Share of $23.94 and a stock price of $53.88. the current ratio is some 38% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
When I look at analysts’ recommendations I find Strong Buy (6), Buy (14), Hold (6) and Underperform (1) recommendations. The consensus recommendation would be a Buy. The 12 month stock price is $57.04. This implies a total return of 8.54% with 5.86% from capital gains and 2.67% from dividends.
Chris MacDonald on Motley Fool says that Suncor gives you commodity exposure without commodity price valuation. Geoffrey Morgan on the Financial Post says that Syncrude woes are hatting Suncor hard. See what analysts are saying about this stock on Stock Chase. Analysts are mostly positive on this stock.
Suncor Energy Inc is a Canadian integrated energy company. It operations include oil sands development and upgrading, offshore oil and gas production, petroleum refining, product marketing and a renewable energy portfolio. Its web site is here Suncor Energy Inc.
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 Monday, July 9, 2018 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.
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