Stick with Suncor Energy Inc. (SU) for the Long Term

The Suncor Energy Inc. (NYSE:SU) bulls won the day, but the reality is that the 0.01 points or 0.03 percent advance gave very little definitive technical indication of where the stock could be headed next. On 14 March, the shares traded at $33.63 with a light trade volume of 2.199 million shares. After opening the session at $33.82, the shares went as high as $33.96 and as low as $33.5637, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $54.5 billion and now has 1.62 billion shares outstanding. Suncor Energy Inc. (SU) stock has gained 3.38 percent of market value in 21 trading days.

SU stock has a trailing 3-year beta of 1.19, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.49 a share in the trailing twelve months. The stock’s value has surged 20.24 percent year to date (YTD) against a rise of 3.25 percent in 12 month’s time. The company’s shares still trade -20.96 percent away from its 1-year high of $42.55 and 30.3 percent up from 52-week low of $25.81. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Suncor Energy Inc. (SU) will probably climb 27.36 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $62-month high price target. This represents a whopping 84.36 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $53, which represents a return potential of 57.6 percent when compared to the closing price of the stock of $33.63 on Thursday, March 14. The lowest price target for the stock is $44 — slightly more than 30.84 percent from SU’s current share price.

History has shown that shares in Suncor Energy Inc. have gone up on 24 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. Investors will get their next glimpse of SU’s Q1 earnings on May 06. Analysts are forecasting revenue to climb 22.1 percent to $7.54B in the fiscal first quarter, while earnings are seen soaring by nearly 28.21 percent to $0.5 per share. It earned $0.62 per share, better than the $0.56, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $8.95B, worse than the $9.72B analysts expected. Earnings are estimated to increase by -24.5 percent this year, 34.97 percent next year and continue to increase by 11.03 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $33.48. Below this, the next support is placed in the zone of $33.32. Till the time, the SU stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 55.42 on daily chart, which may remain a cause for concern. If the price breaks below $33.32 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $33.87 mark may result into a pull-back move towards $34.11 level.

Shares of Suncor Energy Inc. (SU) are trading at a P/E ratio of 26.81 times earnings reported for the past 12 months. The industry SU operates in has an average P/E of 22.44. Its P/E ratio went as low as 14.3X and as high as 163.07 over the 5-year span.Further, it is sporting a 1.9 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.1. 63.3 percent is the gross profit margin for Suncor Energy Inc. and operating margin sits at 16.6 percent. Along with this, the net profit margin is 8.5 percent.