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Why Suncor Stock Fell Marginally in the Second Quarter

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Jun. 28 2019, Updated 7:43 a.m. ET

Suncor stock performance compared to SPY

Suncor Energy (SU) stock has fallen 3% since April 1, 2019, the beginning of the second quarter. The SPDR S&P 500 ETF (SPY), which is a broader equity market indicator, has risen 3% in the same period. Thus, Suncor has underperformed SPY so far in the second quarter. Suncor’s peer Royal Dutch Shell (RDS.A) has risen 5% since April 1. However, Equinor (EQNR) and BP (BP) have decreased by 10% and 4%, respectively, in the quarter so far.

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Suncor stock falls in the second quarter

Oil prices have fallen steeply in the second quarter. WTI (West Texas Intermediate), the benchmark oil, has fallen by 4% in the quarter. Oil prices have declined due to an expectation of demand-supply mismatch. International Energy Agency has reduced its oil demand growth estimates for 2019. Plus, oil inventories in the US have been rising. Thus, the possibility of a supply glut, in the current year, is impacting oil prices.

However, in the quarter, Suncor announced its first-quarter earnings, which surpassed Wall Street analysts’ estimate. In the first quarter, Suncor’s adjusted EPS stood at 0.77 Canadian dollars, which exceeded the estimated EPS of 0.53 Canadian dollars.

The company’s quarterly numbers have been quite robust. In the first quarter, Suncor’s earnings rose by 23% YoY, and cash flows rose by 114% YoY. Plus, the company’s shareholder returns rose by 20% YoY in Q1. Also, the company’s upstream production grew by 11% YoY.

In short

Suncor stock has fallen due to a fall in oil prices partly offset by better-than-expected first-quarter earnings and numbers.

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