(Idea) Suncor Energy - Stellar Operational Execution Will Continue To Drive Shares Higher
Editor’s Note: Rich Kruger and his team continue to deliver outstanding operational results for shareholders. This is our favorite integrated oil major name.
By: Jon Costello
Note: This article cites Canadian dollars unless otherwise specified.
Suncor Energy (SU) (SU:CA) reported yet another outstanding, record-breaking quarter. Year-to-date, it has shattered its initial 2025 guidance. In the process, it has significantly exceeded even my own elevated expectations.
Another Blowout Quarter
During the third quarter, Suncor reported adjusted funds from operations (AFFO) of $3.83 billion, up from $3.79 billion in the previous year despite 13.6% lower quarterly average WTI prices. The result was the company’s second-highest quarterly AFFO ever, and its highest since the third quarter of 2022, when WTI traded around US$90 per barrel.
Free cash flow came in at $2.39 billion, with WTI averaging US$64.95 per barrel. Annualizing the free cash flow, Suncor’s shares trade at a 13% free cash flow yield during a period of depressed oil prices. Of course, free cash flow will surge significantly higher as oil prices increase. The share price will likely follow.
During the quarter, the company returned $1.44 billion of free cash flow to shareholders. It also increased its quarterly dividend by 5%, to $2.40 on an annualized basis, for a safe and attractive 4.0% yield on its current $60 stock price. The company was also active in repurchasing shares, repurchasing $250 million every month so far this year. Year-to-date, it has repurchased 3.4% of its common shares outstanding, $340 million more in repurchases than in 2024, even though oil prices averaged $9 per barrel lower this year.