Investor optimism grows as Suncor hits debt targets, boosts dividends, and signals sector upturn
Suncor Energy Inc.’s latest earnings report indicates a promising shift in Canada’s energy sector, according to David Szybunka, portfolio manager and managing director of the Canoe Energy Team.
BNN Bloomberg reported that Suncor’s shares rose by five percent on Wednesday following a strong premarket announcement that surpassed expectations.
The company not only hit its $8bn debt target ahead of schedule but also announced a dividend increase, contributing to its 27 percent stock gain year-to-date.
Szybunka sees room for continued growth based on Suncor’s current financial performance.
“They hit their $8bn debt target sooner than the street was anticipating, now they’re handing back 100 per cent of free cash flow to shareholders… all of this overall is just a really good print,” Szybunka said, emphasizing the positive impact of Suncor’s financial strides.
Szybunka observed an improvement in investor sentiment across the oil sector, even as news of an emissions cap for oil and gas companies surfaced.
He noted that while this news might typically have triggered investor concerns, his phone stayed quiet. “This is called an upturn,” he remarked. “We were in a downturn, we are now in an upturn.”
Despite his optimism for the sector, Szybunka pointed out that the financial outlook is stronger for large and intermediate energy companies than for some smaller players.
He believes this disparity will drive increased merger and acquisition activity within Canada’s energy sector.
Highlighting the strategic acquisitions made by companies like Canadian Natural Resources Ltd. in oil and Tourmaline in natural gas, Szybunka suggested this trend offers insight for investors.
“Maybe we just follow what the smart guys are doing in the sector,” he advised.
