Suncor Energy Inc Stock Downgraded (SU)

NEW YORK ( TheStreet) -- Suncor Energy (NYSE: SU) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • SUNCOR ENERGY INC has improved earnings per share by 43.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, SUNCOR ENERGY INC increased its bottom line by earning $2.63 versus $1.71 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 41.7% when compared to the same quarter one year prior, rising from $1,028.00 million to $1,457.00 million.
  • The gross profit margin for SUNCOR ENERGY INC is currently lower than what is desirable, coming in at 31.10%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.10% is above that of the industry average.
  • Net operating cash flow has declined marginally to $2,474.00 million or 1.74% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Suncor Energy Inc., together with its subsidiaries, operates as an integrated energy company. The company has a P/E ratio of 8.9, below the average energy industry P/E ratio of 9.2 and below the S&P 500 P/E ratio of 17.7. Suncor Energy has a market cap of $42.07 billion and is part of the basic materials sector and energy industry. Shares are down 8.4% year to date as of the close of trading on Monday.

You can view the full Suncor Energy Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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