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How Suncor (SU) Looks Ahead of Q3 Earnings: Things to Note

Suncor (SU) expects better average oil sands sales volumes in Q3, which in turn, might have aided the company's third-quarter revenues and cash flows.

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This story originally appeared on Zacks

Suncor Energy Inc.  SU is set to release third-quarter 2021 results on Wednesday Oct 27. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 63 cents per share while the same for revenues stands at $9.07 billion.

- Zacks

Let’s delve into the factors that might have impacted this Canadian energy giant’s performance in the September quarter. But it’s worth taking a look at its previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, this Calgary, Alberta-based firm’s operating earnings per share of 39 cents beat the Zacks Consensus Estimate of 36 cents. The bottom line also rebounded from the year-ago loss of 71 cents per share. This outperformance is led by a ramped-up production in the upstream segment and improved refined product sales.

Quarterly operating revenues of $7.4 billion came ahead of the Zacks Consensus Estimate of $6.8 billion. Moreover, the top line rose 141.74% from $3.06 billion in the year-ago quarter.

As far as earnings surprises are concerned, Suncor’s bottom line beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark in the remaining one, delivering a surprise of 86.91%, on average. This is depicted in the graph below:

Suncor Energy Inc. Price and EPS Surprise

Suncor Energy  Inc. Price and EPS Surprise

Suncor Energy Inc. price-eps-surprise | Suncor Energy Inc. Quote

Factors to Consider for Q3

Suncor’s average oil sands sales volumes in the second quarter were 617.4 thousand barrels per day (MBbls/d), up 10.3% from the year-ago quarter’s output of 559.5 MBbls/d, a trend that most likely continued in the third quarter on increased utilization rates. The Zacks Consensus Estimate for oil sands sales volumes is pegged at 606 MBbls/d, indicating a rise of 12.4% from the year-ago quarter's reported figure. This upside is expected to have supported the company’s third-quarter revenues and cash flows.

The integrated energy company anticipates spending the majority of its money in the second and the third quarter of each year as it attempts to complete all its maintenance work between April and October and leave only little for the winter months. As a consequence, Suncor's increased capital expenditures are expected to have escalated its costs, hampering its earnings in the quarter under review.

What Does Our Model Say?

The proven Zacks model does not conclusively predict a beat for Suncor this earnings season. 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 has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 63 cents per share each.

Zacks Rank:Suncor sports a Zacks Rank of 1, currently. You can see  the complete list of today’s Zacks #1 Rank stocks here.

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:

Oceaneering International, Inc. OII has an Earnings ESP of +100.00% and a Zacks Rank #3, currently. The firm is scheduled to release earnings on Oct 27.

Royal Dutch Shell plc (RDS.A) has an Earnings ESP of +4.13% and is presently Zacks #1 Ranked. The firm is scheduled to release earnings on Oct 28.

Diamondback Energy, Inc. FANG has an Earnings ESP of +7.02% and a Zacks Rank#2 at present. The firm is scheduled to release earnings on Nov 1.



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