Suncor Energy

Suncor Energy Q3 2017 EPS $0.52 vs. estimates of $0.33

Management Commentary

-“We achieved record production at oil sands and our refineries ran at full capacity, allowing us to take advantage of a favorable downstream business environment and increasing demand for crude and refined products” said Suncor’s chief executive, Steve Williams.

Financial Highlights

-Operating profit of $867 million, up from $346 million a year ago.

-Suncor produced 739 900 barrels per day, up from 728 100/day from a year ago.

-Operating costs per barrel dropped to $21.6/barrel from $22.15/barrel a year ago.

My Comments

-Suncor energy is the highest quality energy producer in Canada, and a favourite of Warren Buffet.

-They continue to cut costs per barrel as energy prices continue to trade in a $40 to $60 range.

Key Metrics

-Dividend growth 5-year average: 21%

Recommendation: Sell

-For a long-term dividend investor, exposure to the energy sector should only be done by investing in the highest quality businesses that continue to drive shareholder value,, which is Suncor.

-As WTI oil trades above $50/barrel, I expect Suncor to selloff as the price of oil drops closer to $40/barrel, part of the trading range.

-I would take this positive earnings report and subsequent rise in the stock price to lock in gains and wait for a better entry point with oil at a lower price.

Disclosure

I, Jared Flomen, do not own shares of Suncor Energy.

Please consult a financial advisor before making investment decisions. This report represents my views, not actionable advice.