Suncor Energy Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Suncor Energy (NYSE: SU  ) . The energy giant is one of the biggest players in the Canadian oil sands of Alberta, as high oil prices have made it economically viable to recover crude using relatively expensive production methods. Let's take an early look at what's been happening with Suncor Energy over the past quarter and what we're likely to see in its quarterly report Tuesday.

Stats on Suncor Energy

Analyst EPS Estimate

$0.79

Change from Year-Ago EPS

(13.0%)

Revenue Estimate

$10.52 billion

Change from Year-Ago Revenue

3.8%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo Finance.

Can Suncor Energy keep digging up black gold?
Analysts haven't made major changes to their calls on Suncor over the past three months, reducing earnings-per-share estimates by just $0.03. The stock price has also barely budged, falling less than 1% since early November.

Suncor has a huge advantage in the oil sands because it has its own refinery capacity in the region. Because the oil sands produce heavy crude that requires special refining, the glut of production has caused major problems for competitors Penn West Petroleum (NYSE: PWE  ) and Canadian Natural Resources (NYSE: CNQ  ) , which have had to cut down on heavy-crude production or export oil at discounted prices. By contrast, Suncor is able to get prices much closer to global rates on 98% of its production.

That could all change if more pipelines come online. Enbridge (NYSE: ENB  ) in particular is looking to increase its pipeline capacity in the region, but that won't come until mid-2014. Until then, Suncor has a chance to capitalize fully on its refining advantage.

Yet another concern is the reduction in import demand from the U.S., as domestic producers manage to supply more of the nation's overall energy needs. Because costs of production in the oil sands have more than tripled in the past 10 years, even Suncor has had to put expansion plans on hold.

Suncor's earnings report should shed some light on these issues and give investors a sense of how the company is addressing them. Despite concerns, Suncor still has plenty of advantages over its peers that could help boost its stock in the near term.

Why energy is hot right now
Macroeconomic and demographic trends are pointing to great prospects for energy companies in the coming decades, and long-term investors know that you want exposure to this space now. We've picked one incredible natural gas company that presents a rare "double-play" investment opportunity today. We're calling it "The One Energy Stock You Must Own Before 2014," and you can uncover it today, totally free, in our premium research report. Click here to read more.

Click here to add Suncor Energy to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2234129, ~/Articles/ArticleHandler.aspx, 7/24/2014 3:21:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement