Suncor Energy: Will it Miss? - Analyst Blog
February 05 2013 - 11:30AM
Zacks
Canada’s biggest energy firm and the
largest oil sands outfit, Suncor Energy Inc. (SU)
is scheduled to report its fourth-quarter and full-year 2012
results after the market closes on Tuesday, Feb 5, 2013.
In the third quarter, the company
delivered a positive 13.33% earnings surprise, aided by volume
growth at Oil Sands along with better refinery margins and start-up
of operations in Libya. This represented the fourth straight
quarter of positive earnings surprise. Let’s see how things are
shaping up prior to this announcement.
Factors to Consider This
Quarter
The operating scenario for oil sands
developers will remain critical in the near to medium term. Suncor
is also susceptible to oil and gas prices, which are inherently
volatile and subject to complex market forces.
Suncor’s deep oil sands technology,
though proven, is still vulnerable to potential implementation
delays. In particular, there are risks related to growth and other
capital projects that depend wholly or partly on new technologies.
A high debt level and significant capital expenditure may also have
adverse affects on the company’s earnings and cash flows.
In fact, the Zacks Consensus
Estimate for the fourth quarter has moved down by 2 cents to 80
cents per unit over the last 30 days as the tendency for a downward
revision was more obvious.
Earnings
Whispers
Our proven model does not
conclusively show that Suncor Energy is likely to beat the Zacks
Consensus Estimate in the fourth quarter. That is because a stock
needs to have both a positive earnings Expected Surprise Prediction
or ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank
#1 (Strong Buy) or at least Zacks Rank #2 (Buy) or 3 (Hold) for
this to happen. But this is not the case here as elaborated
below.
Negative Zacks
ESP:The Most Accurate estimate stands at 78 cents while
the Zacks Consensus Estimate is higher at 80 cents. This results in
a difference of -2.50%.
Zacks Rank #3
(Hold): Suncor’s Zacks Rank #3, however, increases the
predictive power of ESP. That said, we also need to have a positive
ESP to be confident of an earnings surprise call.
Other Stocks to
Consider
Here are some other companies you
may want to consider on the basis of our model, which shows that
they have the right combination of elements to post an earnings
beat this quarter:
Atlas Energy L.P
(ATLS), earnings ESP of +260.00% and Zacks Rank #1 (Strong
Buy).
Northern Tier Energy
LP (NTI), earnings ESP of +7.97% and Zacks Rank #1 (Strong
Buy).
Hercules Offshore
Inc. (HERO), earnings ESP of +14.29% and Zacks Rank #2
(Buy).
ATLAS ENERGY LP (ATLS): Free Stock Analysis Report
HERCULES OFFSHR (HERO): Free Stock Analysis Report
NORTHERN TIER (NTI): Free Stock Analysis Report
SUNCOR ENERGY (SU): Free Stock Analysis Report
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