Best Dividend Stocks. Analyze the stocks with the best dividend, while also showing decent profitability and health.


SUNCOR ENERGY INC

Toronto Stock Exchange / Energy / Oil, Gas & Consumable Fuels

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to SU. SU was compared to 222 industry peers in the Oil, Gas & Consumable Fuels industry. SU has an excellent profitability rating, but there are some minor concerns on its financial health. SU is valued correctly, but it does not seem to be growing. Finally SU also has an excellent dividend rating. These ratings would make SU suitable for dividend investing!



7

1. Profitability

1.1 Basic Checks

SU had positive earnings in the past year.
SU had a positive operating cash flow in the past year.
SU had positive earnings in 4 of the past 5 years.
SU had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

With an excellent Return On Assets value of 9.37%, SU belongs to the best of the industry, outperforming 88.26% of the companies in the same industry.
SU has a better Return On Equity (19.17%) than 89.67% of its industry peers.
The Return On Invested Capital of SU (8.30%) is better than 81.69% of its industry peers.
The Average Return On Invested Capital over the past 3 years for SU is in line with the industry average of 8.08%.
Industry RankSector Rank
ROA 9.37%
ROE 19.17%
ROIC 8.3%
ROA(3y)8.34%
ROA(5y)4.63%
ROE(3y)17.82%
ROE(5y)9.66%
ROIC(3y)9.58%
ROIC(5y)N/A

1.3 Margins

SU has a better Profit Margin (16.90%) than 71.36% of its industry peers.
In the last couple of years the Profit Margin of SU has grown nicely.
Looking at the Operating Margin, with a value of 17.68%, SU is in line with its industry, outperforming 58.22% of the companies in the same industry.
In the last couple of years the Operating Margin of SU has remained more or less at the same level.
With a decent Gross Margin value of 62.90%, SU is doing good in the industry, outperforming 74.65% of the companies in the same industry.
SU's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 17.68%
PM (TTM) 16.9%
GM 62.9%
OM growth 3YN/A
OM growth 5Y1.29%
PM growth 3YN/A
PM growth 5Y14.61%
GM growth 3Y-0.08%
GM growth 5Y-0.14%

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6

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), SU is creating some value.
Compared to 1 year ago, SU has less shares outstanding
The number of shares outstanding for SU has been reduced compared to 5 years ago.
SU has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.15 indicates that SU is not a great score, but indicates only limited risk for bankruptcy at the moment.
SU's Altman-Z score of 2.15 is fine compared to the rest of the industry. SU outperforms 67.14% of its industry peers.
SU has a debt to FCF ratio of 2.40. This is a good value and a sign of high solvency as SU would need 2.40 years to pay back of all of its debts.
The Debt to FCF ratio of SU (2.40) is better than 84.04% of its industry peers.
SU has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
SU has a Debt to Equity ratio (0.35) which is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.35
Debt/FCF 2.4
Altman-Z 2.15
ROIC/WACC1.12
WACC7.39%

2.3 Liquidity

SU has a Current Ratio of 1.44. This is a normal value and indicates that SU is financially healthy and should not expect problems in meeting its short term obligations.
SU has a Current ratio of 1.44. This is in the better half of the industry: SU outperforms 66.67% of its industry peers.
SU has a Quick Ratio of 1.44. This is a bad value and indicates that SU is not financially healthy enough and could expect problems in meeting its short term obligations.
SU has a Quick ratio (0.88) which is comparable to the rest of the industry.
Industry RankSector Rank
Current Ratio 1.44
Quick Ratio 0.88

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2

3. Growth

3.1 Past

The earnings per share for SU have decreased strongly by -38.70% in the last year.
SU shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 13.99% yearly.
The Revenue for SU has decreased by -15.85% in the past year. This is quite bad
The Revenue has been growing slightly by 4.96% on average over the past years.
EPS 1Y (TTM)-38.7%
EPS 3YN/A
EPS 5Y13.99%
EPS growth Q2Q-30.39%
Revenue 1Y (TTM)-15.85%
Revenue growth 3Y25.79%
Revenue growth 5Y4.96%
Revenue growth Q2Q-7.97%

3.2 Future

The Earnings Per Share is expected to grow by 9.52% on average over the next years. This is quite good.
SU is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -2.58% yearly.
EPS Next Y0.56%
EPS Next 2Y2.94%
EPS Next 3Y3.65%
EPS Next 5Y9.52%
Revenue Next Year3.18%
Revenue Next 2Y-0.3%
Revenue Next 3Y-2.58%
Revenue Next 5YN/A

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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6

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 10.30 indicates a reasonable valuation of SU.
62.44% of the companies in the same industry are more expensive than SU, based on the Price/Earnings ratio.
SU's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 24.67.
Based on the Price/Forward Earnings ratio of 10.24, the valuation of SU can be described as reasonable.
SU's Price/Forward Earnings ratio is in line with the industry average.
SU's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.02.
Industry RankSector Rank
PE 10.3
Fwd PE 10.24

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SU indicates a somewhat cheap valuation: SU is cheaper than 75.59% of the companies listed in the same industry.
72.77% of the companies in the same industry are more expensive than SU, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 10.55
EV/EBITDA 5.35

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SU does not grow enough to justify the current Price/Earnings ratio.
SU has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)18.23
PEG (5Y)0.74
EPS Next 2Y2.94%
EPS Next 3Y3.65%

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8

5. Dividend

5.1 Amount

SU has a Yearly Dividend Yield of 4.05%, which is a nice return.
SU's Dividend Yield is a higher than the industry average which is at 8.84.
SU's Dividend Yield is rather good when compared to the S&P500 average which is at 2.40.
Industry RankSector Rank
Dividend Yield 4.05%

5.2 History

The dividend of SU is nicely growing with an annual growth rate of 7.66%!
SU has paid a dividend for at least 10 years, which is a reliable track record.
SU has decreased its dividend in the last 3 years.
Dividend Growth(5Y)7.66%
Div Incr Years2
Div Non Decr Years2

5.3 Sustainability

33.14% of the earnings are spent on dividend by SU. This is a low number and sustainable payout ratio.
SU's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP33.14%
EPS Next 2Y2.94%
EPS Next 3Y3.65%

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