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. SU also has an excellent dividend rating. This makes SU very considerable for dividend investing!



7

1. Profitability

1.1 Basic Checks

In the past year SU was profitable.
SU had a positive operating cash flow in the past year.
SU had positive earnings in 4 of the past 5 years.
In the past 5 years SU always reported a positive cash flow from operatings.

1.2 Ratios

SU has a better Return On Assets (9.37%) than 88.26% of its industry peers.
With an excellent Return On Equity value of 19.17%, SU belongs to the best of the industry, outperforming 89.67% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 8.30%, SU belongs to the top of the industry, outperforming 81.69% of the companies in the same industry.
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.
SU has a Operating Margin of 17.68%. This is comparable to the rest of the industry: SU outperforms 58.22% of its industry peers.
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

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

2.2 Solvency

SU has an Altman-Z score of 2.18. This is not the best score and indicates that SU is in the grey zone with still only limited risk for bankruptcy at the moment.
The Altman-Z score of SU (2.18) is better than 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.
With an excellent Debt to FCF ratio value of 2.40, SU belongs to the best of the industry, outperforming 84.04% of the companies in the same industry.
SU has a Debt/Equity ratio of 0.35. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.35, SU perfoms like the industry average, outperforming 42.72% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.35
Debt/FCF 2.4
Altman-Z 2.18
ROIC/WACC1.12
WACC7.4%

2.3 Liquidity

A Current Ratio of 1.44 indicates that SU should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.44, SU is in the better half of the industry, outperforming 66.67% of the companies in the same industry.
A Quick Ratio of 0.88 indicates that SU may have some problems paying its short term obligations.
SU's Quick ratio of 0.88 is in line compared to the rest of the industry. SU outperforms 54.93% of its industry peers.
Industry RankSector Rank
Current Ratio 1.44
Quick Ratio 0.88

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2

3. Growth

3.1 Past

SU shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -38.70%.
Measured over the past years, SU shows a quite strong growth in Earnings Per Share. The EPS has been growing by 13.99% on average per year.
Looking at the last year, SU shows a very negative growth in Revenue. The Revenue has decreased by -15.85% in the last year.
Measured over the past years, SU shows a small growth in Revenue. The Revenue has been growing by 4.96% on average per year.
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

Based on estimates for the next years, SU will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.52% on average per year.
The Revenue is expected to decrease by -2.58% on average over the next years.
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

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

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6

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 10.64, which indicates a very decent valuation of SU.
62.44% of the companies in the same industry are more expensive than SU, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 25.02, SU is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 10.58, the valuation of SU can be described as reasonable.
The rest of the industry has a similar Price/Forward Earnings ratio as SU.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.32, SU is valued rather cheaply.
Industry RankSector Rank
PE 10.64
Fwd PE 10.58

4.2 Price Multiples

75.59% of the companies in the same industry are more expensive than SU, based on the Enterprise Value to EBITDA ratio.
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 10.9
EV/EBITDA 5.49

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)18.83
PEG (5Y)0.76
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

On average, the dividend of SU grows each year by 7.66%, which is quite nice.
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

SU pays out 33.14% of its income as dividend. This is a 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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