Suncor Energy (SU) Stock Rises on Higher Oil Prices

NEW YORK (TheStreet) -- Shares of Suncor Energy (SU) were gaining 2.9% to $29.08 Tuesday as oil prices increased as a result of lower shale oil production forecasts.

WTI crude oil for July delivery was up 3.5% to $60.17 a barrel early Tuesday afternoon, and Brent crude oil for July delivery was up 3.7% to $64.98 a barrel.

Oil prices were falling after the U.S. Energy Information Administration said it expects shale oil production to fall by 91,000 barrels a day to 5.5 million barrels a day in July when compared to June production rates, according to the Wall Street Journal.

High shale oil production in the U.S. contributed to the recent record high U.S. oil stockpile levels and helped bring down oil prices last year.

Suncor Energy is an oil company focused on developing Canada's petroleum resource basin, Athabasca oil sands.

TheStreet Ratings team rates SUNCOR ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SUNCOR ENERGY INC (SU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.26, which illustrates the ability to avoid short-term cash problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.5%. Since the same quarter one year prior, revenues fell by 31.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $876.00 million or 49.45% when compared to the same quarter last year. Despite a decrease in cash flow of 49.45%, SUNCOR ENERGY INC is in line with the industry average cash flow growth rate of -53.19%.
  • SUNCOR ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, SUNCOR ENERGY INC reported lower earnings of $1.83 versus $2.59 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 123.0% when compared to the same quarter one year ago, falling from $1,485.00 million to -$341.00 million.
  • You can view the full analysis from the report here: SU Ratings Report

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