Suncor (SU) Q3 Earnings Preview: What Investors Need to Know
Suncor Energy SU is set to release third-quarter results on Nov 8. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 88 cents per share on revenues of $8.2 billion.
Let’s delve into the factors that might have influenced the Canadian energy giant’s performance in the September quarter. But it’s worth taking a look at SU’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, this Calgary, Alberta-based operator beat the consensus mark on strong upstream production. SU had reported earnings per share of 71 cents, 12 cents above the Zacks Consensus Estimate. Revenues of $8.7 billion generated by the firm also came in 10.5% above the Zacks Consensus Estimate.
SU beat the Zacks Consensus Estimate in each of the last four quarters, which resulted in an earnings surprise of 9.3%, on average. This is depicted in the graph 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 third-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 38.9% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 29.1% decrease from the year-ago period.
Factors to Consider
Suncor Energy is expected to have benefited from higher output during the quarter. Considering SU’s significant oil sands and conventional production platforms, our expectation for the company’s third-quarter volume is pegged at some 749,300 barrels of oil equivalent per day (BOE/d), up 3.5% from the year-ago quarter’s level of 724,100 BOE/d.
On a further positive note, the decrease in Suncor Energy’s costs might have buoyed up its to-be-reported bottom line. In particular, our estimate for oil and product purchase costs is pegged at C$3.3 billion, indicating a 45.2% decrease from C$6.1 billion reported in the year-ago quarter. Our model also predicts the company’s total expenses to come down 43.8% year over year to C$8.7 billion. The downward trajectory could be attributed to SU’s successful cost-control initiatives.
On a somewhat bearish note, lower year-over-year oil realizations might have dampened some of the positive impacts. According to the U.S. Energy Information Administration, in July, August and September of 2023, the average monthly WTI crude price was $76.03, $81.32 and $89.43 per barrel, respectively, which turned out to be $82.26 for the quarter. In 2022, average prices were $99.39 in July, $91.48 in August and $83.80 in September, or $91.56 for the quarter. This price drop is likely to have pulled down the revenues and cash flows of Suncor Energy.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Suncor Energy is likely to beat estimates in the third 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: Suncor Energy has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 88 cents per share each.
Zacks Rank: SU currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
Stocks to Consider
While an earnings beat looks uncertain for Suncor Energy, here are some firms that you may want to consider on the basis of our model:
AirSculpt Technologies, Inc. AIRS has an Earnings ESP of +11.11% and a Zacks Rank #2. The firm is scheduled to release earnings on Nov 10.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The 2023 Zacks Consensus Estimate for AirSculpt Technologies indicates 13.5% year-over-year earnings per share growth. Valued at around $371.4 million, AIRS has gained 26.3% in a year.
Applied Materials, Inc. AMAT has an Earnings ESP of +0.86% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 16.
Over the past 90 days, Applied Materials saw the Zacks Consensus Estimate for fiscal 2023 move up 7.6%. Valued at around $117.3 billion, AMAT has gained 47% in a year.
Astria Therapeutics ATXS has an Earnings ESP of +13.73% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 13.
Astria Therapeutics beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 9.9%, on average. Valued at around $138.5 million, ATXS has lost 41.1% in a year.
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Suncor Energy Inc. (SU) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
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AirSculpt Technologies, Inc. (AIRS) : Free Stock Analysis Report
