Is a Beat in Store for Suncor (SU) This Earnings Season?
Zacks Investment Research | Jan 29, 2021 06:40AM ET
Suncor Energy (NYSE:SU) Suncor Energy Inc. Quote
Trend in Estimate Revision/h3
The Zacks Consensus Estimate for the fourth-quarter bottom line remained the same in the last seven days. However, the estimated figure indicates 130.8% deterioration year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 21.9% decline from the year-ago period.
Factors to Consider This Quarter/h3
In the previous quarter, Suncor’s downstream business delivered solid results, a trend that is most likely to have continued in the fourth quarter because of strong refinery utilization. Per the Q3 earnings transcript, the company reported utilization rates of more than 95% exiting the September quarter and is confident of maintaining the momentum in the October-December period. Further, the company’s involvement in energy trading is likely to have enabled it to realize substantial value in crude and refined products.
Suncor Energy has also done a fairly admirable job at reducing costs. Its cash outflows as capital expenditure continue to fall as it reins in spending levels. Apart from significant capital cuts, the company should realize sizeable savings from headcount reduction and operating cost control. In fact, Suncor announced targeted reductions of $1 billion in annual operating costs for 2020. All this is expected to have pushed Suncor Energy’s fourth-quarter earnings and cash flows higher.
Why a Likely Positive Surprise?/h3
Our proven model predicts an earnings beat for Suncor this season. The combination of a positive To read this article on Zacks.com click here.
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