IMO - Suncor Energy Looks Undervalued Against Peers
2024-02-06 19:59:41 ET
Summary
- Suncor Energy's share price has fallen 3% in the past 5 years despite demand for oil only growing.
- Suncor Energy has significant reserves and falling net debt and is committed to shareholder returns via buybacks.
- It trades at a discount to peers that I believe is unwarranted and has a potential upside of 42% to reach fair value.
Introduction
Suncor Energy ( SU ) is one of the largest integrated oil sand producers in Canada. Over the past five years, the shares have fallen over 3%, significantly lagging the S&P 500 as well as the Energy ETF ( XLE ). However, with demand for energy continuing to grow, Suncor looks in increasingly good shape with the opening of the Trans Mountain Pipeline, vast oil reserves, and an improving balance sheet. Combined with a solid plan on what to do with excess free cash flow, this means Suncor is set to boost returns to shareholders whilst setting the company on solid future footing. Let me explain why Suncor Energy is a buy....
Suncor Energy Looks Undervalued Against Peers