Did Operational Incidents Dent Suncor's (SU) Q4 Earnings?
Suncor Energy Inc. SU is set to release fourth-quarter results on Feb 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 78 cents per share on revenues of $9.3 billion.
Let’s delve into the factors that might have influenced the Canadian energy giant’s performance in the December quarter. But it’s worth taking a look at Suncor’s previous-quarter performance first.
Highlights of Q3 Earnings & Surprise History
In the last-reported quarter, the Calgary, Alberta-based operator missed the consensus mark due to accelerated costs and expenses. Suncor had reported operating earnings per share of 56 cents, below the Zacks Consensus Estimate of 58 cents. The firm’s quarterly revenues of $8.1 billion also underperformed the Zacks Consensus Estimate by 10.6%.
Suncor beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering an earnings surprise of 7.5%, on average. This is depicted in the chart below:
Suncor Energy Inc. Price and EPS Surprise
Suncor Energy Inc. price-eps-surprise | Suncor Energy Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the fourth-quarter bottom line remained the same in the last seven days. The estimated figure indicates a 1,214.3% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 83.9% increase from the year-ago period.
Factors to Consider
In a recent release, Suncor said that production was lower than anticipated at two of its oil sands sites last month due to operational mishaps. Malfunctions at Syncrude and Firebag lowered oil output by about 195,000 barrels per day (bpd) in the latter half of December. At Syncrude, complications were related to failures in chains that drove crushing equipment as well as the delay in repair due to harsh weather conditions. Meanwhile, at Firebag, 170 wells were shut down and two plants went offline due to frozen parts.
As a reflection of these issues, the Zacks Consensus Estimate for fourth-quarter average oil sands production volume is pegged at 430,000 bpd, indicating a 36% decline from the year-ago levels of 671,500 bpd. This output dip is likely to have dented Suncor’s revenues and cash flows.
On a somewhat bullish note though, Suncor’s to-be-reported quarter is expected to have benefited from the surge in crude prices as it has considerable exposure to the commodity.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Suncor is likely to beat estimates in the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.37%.
Zacks Rank: Suncor currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
While an earnings beat looks uncertain for Suncor, here are some firms from the energy space that you may want to consider on the basis of our model:
ExxonMobil XOM has an Earnings ESP of +5.51% and a Zacks Rank #1. The firm is scheduled to release earnings on Feb 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
XOM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 54.7%. ExxonMobil has rallied around 77.9% in a year.
Murphy USA MUSA has an Earnings ESP of +28.82% and a Zacks Rank #1. The firm is scheduled to release earnings on Feb 2.
MUSA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 20.9%. Murphy USA has gained around 52.3% in a year.
ConocoPhillips COP has an Earnings ESP of +2.54% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Feb 3.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. ConocoPhillips has rallied around 131.7% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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