Can Suncor’s Interim CEO Help the SU Stock Reach Fair Value

Should You Buy the SU Stock? 2 valuation methods will be used throughout this analysis to determine a SU Stock Forecast, which can help us answer this popular question.

As you may know, Suncor energy inc. (NYSE: SU) is one of the biggest names in the Oil & Gas Integrated industry. This analysis aims to determine a price prediction for the SU stock based on several assumptions (which may hinder the accuracy of the forecast).

Stock forecasting is not always accurate as it is very difficult and uncertain. However, I will use the available data to determine an SU stock forecast which can help us to get an idea of their relative value.

Recent SU Stock News:

Suncor has historically had issues with employee safety and has recently had its CEO step down due to an employee’s death. This death occurred 1 month ago, and since then the SU stock has decreased by nearly 7%. Since then, SU has appointed an interim CEO who has committed money and resources to improve safety within Suncor.

Suncor earnings: Q2 profit more than quadruples to nearly $4B (yahoo.com)

SU Stock Forecast for 2023 is $38.74 Per Share

The Suncor energy inc. stock price prediction of $38.74 was derived from 2 main valuation methods (which are averaged for the final price target you see above). I’ll dive into the approach to show you how I determined how I “predicted” a stock price of $38.74 for SU.

  1. SU Financial Growth Metrics
  2. SU Comparable Companies Analysis

Using Financial Ratios to Determine an SU Stock Forecast

SU’s forward EPS is forecasted to be $5.70 in 2023. Furthermore, SU’s forward Price to Earnings Ratio is expected to reach 5.60 by 2023. Using SU’s forward P/E and EPS, we can multiply them together to reach a SU stock forecast of $31.92 per share

There are many ways to forecast stock prices, however, P/E and EPS are the most commonly used financial metrics by analysts and investors.

SU Stock Forecast: Comparable Analysis

SU Stock Competition

To have a comparable analysis, we need to first highlight SU’s competitors. These companies need to exhibit; a stock, financial ratios, similar operations, and a similar market cap.

Keeping this in mind, here’s a list SU’s competitors:

KMI, PSX, WMB, MPC, VLO, DVN, MPLX, OXY, TRP, and ET

SU Price Forecast Using P/E and P/B Ratios

  1. Price/Book (P/B): SU’s P/B ratio is currently 1.45, compared to their peers’ average P/B ratio of 2.11. This implies that SU is undervalued and should experience an increase in its stock price of 45.37% to be considered to be “at fair value” (based on SU’s P/B compared to the P/B of their peers).
  2. Price/Earnings (P/E): SU’s P/E ratio is currently 9.2, compared to the average P/E ratio of SU’s peers being 14.3. This implies that SU is undervalued and their share price should change by a factor of 55.46% to be at fair value (based on SU’s P/E compared to the P/E of their peers).

Based off of these 2 comparable analyses, the SU stock is undervalued and should increase by (an average of) 50.41% to be considered “at fair value”. Applying this to SU’s current price of $30.28, we arrive at a forecasted price of $45.55 per share.

What do Analysts Think of the SU Stock

Currently, there are 22 analyst ratings that have been given to the SU stock, which are distributed as follows:

18 Buys

4 Holds

0 Sells

81.82% of analysts have given SU a ‘buy” rating, citing an overall bullish sentiment, with analyst “buy” ratings forming a majority of total ratings given. This is great news for us as it confirms our previous conclusion that the SU stock is undervalued and should experience an increase in price.

SU Stock Forecast and Conclusion

Based on my SU stock forecast of $38.74 (derived from P/E & EPS, and comparable valuations), SU’s current price of $30.28, and overall bullish sentiment for SU from the analysts, I would agree with the analysts and say SU is a buy.

Let me know what you think, happy to dive into other aspects of SU to help you make an informed investment decision.

Originally published at https://utradea.com.

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