Is it a good company at a reasonable price? This is an energy stock and so is risky. It has done well for shareholders over the longer term. The time to buy any energy stock, if you are willing to take on the risk, is when it is cheap. This stock is currently testing as cheap.
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.
When I was updating my spreadsheet, I noticed that past annual reports were nowhere to be seen. Most sites give at least a few. This site gives annual report for 2023 and the first quarter of 2024 and that is all. I cannot find other reports anywhere on the internet. Usually, they are available.
If you had invested in this company in December 2013, for $1,005.48 you would have bought 27 shares at $37.24 per share. In December 2023, after 10 years you would have received $373.95 in dividends. The stock would be worth $1,148.58. Your total return would have been $1,522.53. This would be a total return of 4.78% per year with 1.34% from capital gain and 3.44% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.24 | $1,005.48 | 27 | 10 | $373.95 | $1,148.58 | $1,522.53 |
The current dividend yield is good with dividend growth low. The current dividend is good (5% to 6% ranges) at 4.24%. The 5, 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 4.74%, 3.71% and 3.11%. The dividend growth is low (less than 8% per year) at 7.9% per year over the past 5 years. The last dividend increase was in 2023 and it was for 4.8%. Dividends were cut in 2020 and they have been restored and higher than ever. This is the only decrease in dividends over the past 31 years. Dividends have been raised in 21 of the past 31 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is good at 33% with 5 year coverage at 53%. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is good at 21% with 5 year coverage at 23%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 41% with 5 year coverage at 33%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 20% with 5 year coverage at 19%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 428% with 5 year coverage fine at 56%.
| Item | Current | 5 Years |
|---|---|---|
| EPS | 33.25% | 53.27% |
| AFFO | 20.66% | 23.52% |
| AEPS | 41.27% | 32.97% |
| CFPS | 20.38% | 19.24% |
| FCF | 428.86% | 55.59% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.27 and currently at 0.23. The Liquidity Ratio for 2023 is fine at 1.44 and 1.51 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.44 and currently at 2.62. The Debt Ratio for 2023 is good at 1.96 and 1.99 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.05 and 1.05 and currently at 2.01 and 1.01.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.27 | 0.23 |
| Intang/GW | 0.09 | 0.07 |
| Liquidity | 1.44 | 1.51 |
| Liq. + CF | 2.44 | 2.62 |
| Debt Ratio | 1.96 | 1.99 |
| Leverage | 2.05 | 2.01 |
| D/E Ratio | 1.05 | 1.01 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 7.89% | 6.10% | 2.21% | 3.88% |
| 2013 | 10 | 11.17% | 4.78% | 1.34% | 3.44% |
| 2008 | 15 | 16.99% | 7.13% | 3.99% | 3.13% |
| 2003 | 20 | 16.66% | 7.58% | 4.96% | 2.62% |
| 1998 | 25 | 13.70% | 11.44% | 8.50% | 2.93% |
| 1995 | 28 | 12.88% | 13.81% | 10.39% | 3.42% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.93, 6.74 and 7.56. The corresponding 10 year ratios are 9.98, 11.71 and 13.45. The corresponding historical ratios are 10.58, 13.89 and 17.29. The current P/E Ratio is 9.23 based on a stock price of $51.42 and EPS estimate for 2024 of $5.57. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.86, 8.367 and 9.38. The corresponding 10 year ratios are 8.66, 10.52 and 12.64. The current P/AEPS Ratio is 9.28 based on a stock price of $51.42 and AEPS estimate for 2024 of $5.54. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 3.68, 4.19 and 4.69. The corresponding 10 year ratios are 5.48, 6.77 and 7.98. The current P/AFFO Ratio is 5.08 based on a stock price of $51.42 and AFFO estimate for 2024 of $10.12. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $65.51. The 10-year low, median, and high median Price/Graham Price Ratios are 0.78, 0.93 and 1.17. The current P/GP Ratio is 0.78 based on a stock price of $51.42. The current ratio is at low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.36. The current P/B Ratio is 1.49 based on a stock price of $51.42, Book Value per Share of $34.43 and Book Value of $44,308M. The current ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share (BVPS) estimate for 2024 of $35.90. This implies a ratio of 1.43 based on a stock price of $51.42 and a Book Value of $46,204M. This ratio is 5.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.55. The current P/CF Ratio is 4.85 based on Cash Flow per Share estimate for 2024 of $10.60, Cash Flow of $13,642M and a stock price of $51.42. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.11. The current dividend yield is 4.24% based on a stock price of $51.42 and dividends of $2.18. The current ratio is 36% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.41. The current dividend yield is 4.24% based on a stock price of $51.42 and dividends of $2.18. The current ratio is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.71. The current P/S Ratio is 1.29 based on Revenue estimate for 2024 of $51,256M, Revenue per Share of $39.83 and a stock price of $51.42. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield tests are saying that the stock price is relatively cheap. This is confirmed by the P/S Ratio test which says that the stock price is relatively cheap. Other tests are saying that the stock price is either cheap or reasonable.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (5) and Hold (11). The consensus would be a Buy. The 12 month stock price is $60.34, with a high of $79.00 and a low of $50.00. The consensus price of $60.34 implies a total return of 21.59% with 17.35% from capital gains and 4.24% from dividends based on a current stock price of $51.42.
There are 11 entries on Stock Chase for this stock for 2024 with 3 Do Not Buy or Sell and the rest Buys. Stock Chase gives this company 5 stars out of 5. Puja Tayal on Motley Fool thinks this stock is too risky to buy. Andrew Button on Motley Fool thinks this is good stock to buy. The company put out a press release via Newsfile about their fourth quarter of 2024. The company put out a press release via Newsfile on their first quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street gives 2 warnings of earnings are forecast to decline by an average of 7.7% per year for the next 3 years; and unstable dividend track record. They are right here about unstable dividends.
Suncor Energy Inc is an integrated energy company. The company's operating segments include Oil Sands, Exploration and Production, and Refining and Marketing. Geographically, the company generates a majority of its revenue from Canada. Its web site is here Suncor Energy Inc.
The last stock I wrote about was about was Jamieson Wellness Inc (TSX-JWEL, OTC-JWLLF) ... learn more. The next stock I will write about will be TMX Group Ltd (TSX-X, OTC-TMXXF) ... learn more on Wednesday, July 10, 2024 around 5 pm. Tomorrow on my other blog I will write about Scams .... learn more on Tuesday, July 9, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment