Is Suncor a Winner?

With shares of Suncor Energy (NYSE:SU) trading at around $31.38, is SU an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The information in this section will be as objective as possible and simply pass along information about the company’s current situation. Then, we will look at some big-picture numbers and form an opinion on the stock.

Let’s take a look at the negatives first. Last quarter’s earnings weren’t impressive. This was mostly due to a one-time impairment charge as well as lower average prices for oil sands production. The latter was expected, but it’s still a negative. As far as the former is concerned, Suncor took a $1.49 billion writedown for its Voyageur project. Costs increased while crude prices fell, putting the project’s future potential in doubt. The Voyageur project has now been halted. This move might be permanent, but that won’t be determined until later in the year. A final negative for Suncor is a lack of pipeline capacity.

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On the positive side, the Firebag and Hebron projects are going well. This is especially the case for Firebag, where there has been a recent ramp up. Suncor also has upstream and downstream assets, making it highly diversified. Furthermore, Suncor has wind assets, which give it a nice hedge against any changes in legislation when it comes to energy. A final positive is that Suncor has more projects in the works, which gives the company good future growth potential.

Let’s take a look at some important numbers prior to forming an opinion on the stock…

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