Suncor Energy (SU.TO)(SU) shares jumped on Wednesday, as investors responded to rising third-quarter profit and plans to better reward shareholders. Analysts continue to fawn over the company’s strong performance under CEO Rich Kruger, who has led Suncor for the past 18 months.
Toronto-listed shares climbed as much as 5.25 per cent, adding to a 25 per cent year-to-date increase. Suncor reported financial results for the three months ended Sept. 30 after the closing bell on Tuesday.
“Refined product sales of 612,000 barrels a day in the third quarter, [that’s] the highest quarterly sales in our history,” Kruger said on a Wednesday morning conference call with analysts. “For those keeping track, that’s now back-to-back-to-back quarterly records.”
Suncor says it earned $2.02 billion in its third quarter, up from $1.54 billion a year earlier. The Calgary-based integrated oil and gas firm reported an adjusted profit of $1.88 billion or $1.48 per share, topping analyst expectations. The company announced a five per cent increase to its base dividend on Wednesday. Suncor also announced the achievement of its $8 billion net debt target, triggering the allocation of all excess free cash flow towards share repurchases, up from 75 per cent.
“I couldn’t think of a better Christmas present for our shareholders than to achieve that target by year end 2024,” Kruger said. “Christmas is coming early this year at Suncor.”
Suncor says its third-quarter upstream production rose by 20 per cent on an annualized basis to 828,600 barrels per day (bpd). Refinery throughput was 487,600 bpd, up five per cent year-over-year. The company maintained 2024 guidance of 770,000-810,000 bbl/d in total production, and $6.4 billion in capital spending.
“There are good quarters, bad quarters, and great quarters. This was a great quarter,” Scotiabank Global Equity Research analyst Jason Bouvier wrote in a research note on Wednesday. “Congrats to the SU team.”
He boosted his price target to $62 per share from $59, while maintaining a “sector perform” rating.
“Suncor crushed Q3, which should support strong relative performance today,” TPH & Co. analyst Jeoffrey Lambujon wrote. He maintains a $62 per share price target, with a “hold” rating.
BMO Capital Markets analyst Randy Ollenberger increased his price target to $65 per share, while maintaining an “outperform” rating.
“Suncor beat consensus by roughly 25 per cent, with the outperformance coming from virtually all of its assets, [with] the largest positive surprise coming from the downstream, where the company achieved record-high refining volumes and utilization,” he stated in a note to clients.