Suncor Energy Inc Stock Hold Recommendation Reiterated (SU)

Editor's Note: 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.

NEW YORK ( TheStreet) -- Suncor Energy (NYSE: SU) has been reiterated by TheStreet Ratings as a hold with a ratings score of C+. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

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Highlights from the ratings report include:
  • SU's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
  • SU, with its decline in revenue, slightly underperformed the industry average of 1.3%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for SUNCOR ENERGY INC is currently lower than what is desirable, coming in at 26.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.95% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to $1,175.00 million or 58.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Suncor Energy Inc., together with its subsidiaries, operates as an integrated energy company. Suncor Energy has a market cap of $42.1 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 15.00, below the S&P 500 P/E ratio of 18.00. Shares are down 16.9% year to date as of the close of trading on Friday.

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.

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