SUNCOR ENERGY INC (SU): what the price assumes
In the published model solve dated 2026-Q2, anchored at $65.77, SUNCOR ENERGY INC (SU) is priced for +2.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-24.
Generated: 2026-07-24 · Exported: 2026-07-25 · Source: https://boothcheck.com/report/SU
Headline
| Field | Value |
|---|---|
| Ticker | SU |
| Company | SUNCOR ENERGY INC |
| Sector / Industry | Energy |
| Current price | $65.77/sh |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 4.5% |
| Operating margin today | 16.5% |
| Margin compression (value-band) | -12.0pp |
| Implied growth | 2.1% |
| Multiple paid | 14x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6pp.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.26σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.43x | 4 | expensive |
| Earnings | 1.14x | 2 | expensive |
| Relative | 1.00x | 4 | justifies |
| Growth | 0.99x | 2 | justifies |
Families that justify the price: Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $0.00 | — | no | Negative/zero FCF — equity value floored at $0 |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $49.12 | 1.34x | yes | P/E 12.53x (blended: static sector reference 10x + trailing (TTM) 18x), scenarios: 9.4x / 12.5x / 15.0x (bear / base = reference held flat / bull), EV/EBITDA 6x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $60.09 | 1.09x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $38.59 | 1.70x | yes | BV/sh $27.22, ROE (TTM) 13.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $45.56 | 1.44x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $74.43 | 0.88x | yes | Rev $38.5B, growth 10% (input: historical growth; tapered), Terminal P/S: 1.6x / 2.1x / 2.5x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $98.29 | 0.67x | yes | EPS $3.57, growth 28% (input: historical EPS growth), PEG=0.67 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $47.04 | 1.40x | yes | BV $27.22 + 5yr PV of (ROE (TTM) 13.1% − Kₑ 9.3%) × BV; BV grows 8.5%/yr |
| Graham Number | Asset | $46.73 | 1.41x | yes | √(22.5 × EPS $3.57 × BVPS $27.22) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $115.07 | 0.57x | yes | EPS $3.57 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $37.91 | 1.73x | yes | Revenue $38.51B × sector P/S 1.2x |
| PEG Fair Value | Relative | $133.73 | 0.49x | yes | EPS $3.57 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $38.55 | 1.71x | yes | EPS $3.57 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $4.5b |
| Net debt / NOPAT (after-tax) | 0.98x |
| Net debt / operating income (pre-tax) | 0.73x |
| Interest coverage | 12.4x |
| Share count CAGR (buyback) | -4.9% |
| Burning cash | no |
Bullet Takeaways
- Suncor is the rare producer that also owns the finished product: 875,200 barrels a day out of the ground in the March quarter, 497,800 barrels a day through its own refineries, and 680,900 barrels a day of refined product sold, all three first-quarter records.
- Management is aiming at a WTI breakeven of US$38 a barrel by 2028 while the benchmark opened near $86.50 on July 23, 2026, and that gap is the whole reason the cash keeps arriving.
- The same barrel is being set by a shooting conflict around the Strait of Hormuz, and second-quarter results on August 4, 2026 cover April through June, so the July escalation will not show up until the quarter after.
Bull Case
Most oil companies are a bet on one number. Suncor is a bet on the distance between two of them. It produced 875,200 barrels a day in the March quarter, ran 497,800 barrels a day through its own refineries and sold 680,900 barrels a day of finished product, each a first-quarter record. When crude is expensive the upstream captures it; when crude is cheap the refineries and the retail network buy feedstock cheaply. The company reports in Canadian dollars, and in that currency the quarter produced C$4,030 million of adjusted funds from operations against C$3,045 million a year earlier.
The asset base is unusual in a way that matters more than most investors credit. Oil sands are mined or steamed rather than drilled, which means there is no decline curve to outrun and no exploration budget to defend every year. The heavy capital was committed long ago. What remains is an operating problem: keep the plants running, keep unit costs down, keep the barrels moving. That is why the company can put a US$38 per barrel WTI breakeven for 2028 on a slide alongside 100,000 barrels a day of upstream growth, and be taken seriously. The benchmark opened near $86.50 on July 23, 2026. The distance between those two figures is not subtle.
Against that, what the price asks for is modest. At $65.77 the price requires operating profit to grow about 2.1% a year. That is a low bar for a business with this much operating leverage, and it does not require the conflict premium in crude to persist. It requires the plants to keep running.
The cash comes back rather than going into new projects. Suncor returned C$1,537 million to shareholders in the March quarter, C$0.60 a share of it as dividend, and expects nearly C$4 billion of repurchases across 2026, an increase of more than 30%. That shows up in the one place it cannot be dressed up: the share count has fallen about 4.9% a year since the end of 2021, so a holder who did nothing now owns a meaningfully larger claim on the same barrels.
Execution is the quiet part of the case. In the same three months, Imperial Oil, the other large Canadian integrated, earned C$940 million against C$1,288 million a year earlier, with refinery utilisation at 88%. Suncor's funds flow went the other way over the same span. Two companies in one basin, facing the same benchmark, moved in opposite year-on-year directions, and what separated them was volume and uptime rather than the commodity.
The bull grants the obvious concession: none of this is Suncor's doing. A conflict in the Gulf set the barrel, and a settlement would unset it. The reply is that a breakeven target in the thirties and a shrinking share count keep working well below today's benchmark, and the quote on offer does not need the conflict premium to last.
Bear Case
The price requires about 2.1% a year of operating-profit growth, and that is not the difficult part. The difficulty is what it grows from. Trailing profit is being earned into a crude benchmark that sits where it does because tankers are being attacked in the Strait of Hormuz and Kazakhstan suspended crude exports after drone strikes. Two per cent a year compounding off a war premium is a different proposition from two per cent a year off a normal one.
The methods are unusually close together, and that closeness is itself the warning. Earnings-power, peer-multiple and cash-flow reads all cluster tightly around the current quote. Only the asset lenses dissent, and the price sits about 43% above where book value plus profitability lands. That is the classic signature of a cyclical priced on good earnings. The profit-based methods look reasonable precisely because the profit is good; the balance-sheet method, which does not care what the commodity did last quarter, does not agree.
Then there is what Suncor actually sells. Canadian heavy barrels clear at a discount to the benchmark, and that discount widens whenever egress capacity tightens, which is a recurring feature of the basin rather than an occasional accident. Oil sands are also among the most carbon-intensive ways to produce a barrel in the developed world, which places the business permanently in the path of emissions policy, carbon levies, and the cost of capital that lenders and index funds attach to both. None of that shows up in a quarter. All of it shows up in the multiple the market is willing to pay across a decade.
Operationally, the risk is concentration. Oil Sands operations produced 798,800 of the 875,200 total barrels a day in the March quarter. These are a handful of very large facilities, and an unplanned outage at one of them is not a marginal event for a quarter. A record first quarter also sets an awkward comparison base for every quarter that follows it.
Solvency is not the issue, but capital allocation might be. Net debt runs about 0.73 times pre-tax operating profit and profit covers the interest bill about 12.4 times over, so there is no financing question here. What there is instead is a company committing to nearly C$4 billion of repurchases in a year whose profits depend on a geopolitical event holding. Buying back stock at the top of a commodity cycle is the traditional way cyclicals destroy capital, and the honest test is not whether the buybacks happen but what the barrel was fetching when they were funded.
Stripped down, the bear case is not that Suncor is poorly run. It is that a well-run producer of an undifferentiated commodity is worth roughly what the commodity is worth, and the commodity is currently worth what a conflict says it is worth. The 2.1% a year the price needs is a small number bolted to a base that could move by a third in either direction inside two quarters.
Valuation
At $65.77 on July 24, 2026, the price puts about 14.1 times operating income on the business and requires that operating income to grow about 2.1% a year. One note before the rest: Suncor reports in Canadian dollars while the share quote here is the New York one, so every figure below carrying a C$ prefix is as filed.
What stands out is how little the methods argue. The earnings-power methods put the price about 14% above where they land, peer multiples land level with it, and the growth-and-cash-flow methods land within a point of it. Only the asset lenses dissent: the price sits about 43% above where book value plus profitability lands. For a cyclical, that shape is expected rather than contradictory. Profit-based methods take today's profit as their starting point, and today's profit is good.
The trailing year ran an operating margin near 16.5% of revenue, and that single ratio contains most of the argument. Refining and retail smooth it, oil sands volume drives it, and the benchmark barrel sets its ceiling. A reader deciding whether the price is demanding should probably not ask whether 2.1% growth is achievable, because it plainly is. The better question is what happens to the base if the barrel gives back the conflict premium.
Solvency is not where the risk lives. Net debt runs about 0.73 times pre-tax operating profit, and profit covers the interest bill about 12.4 times over. The company itself reported C$6,842 million of net debt against C$3,271 million of cash and equivalents at the end of the March quarter. The more informative balance-sheet fact is the share count, down about 4.9% a year since the end of 2021, with nearly C$4 billion of further repurchases planned for 2026. Held flat on the barrel, that alone lifts per-share economics year after year.
Cohort position is where the integrated model earns its keep. Imperial Oil, the closest Canadian comparable, posted C$940 million of first-quarter net income against C$1,288 million a year earlier, with refinery utilisation running at 88%. Suncor's funds flow moved the other way across the same period. Two businesses sharing a basin and a benchmark were separated by throughput, which is the one variable an integrated producer actually controls.
Catalysts
Second-quarter results are due after the close on August 4, 2026, with the webcast the following morning. That period covers April through June, so the July escalation in crude will not appear in it. What will appear is whether record first-quarter throughput survived spring turnaround season, and whether the repurchase pace is tracking the nearly C$4 billion signalled for the year.
The barrel is the live variable. WTI opened near $86.50 on July 23, 2026 and was trading around $87.88 the following day, moved by the US-Iran conflict, attacks on shipping in the Strait of Hormuz, and Kazakhstan's suspension of crude exports after drone strikes. De-escalation removes a premium currently doing a great deal of work in these earnings. Further disruption at Hormuz does the opposite, and neither outcome is forecastable from a balance sheet.
Further out, two company-specific markers are worth tracking: the US$38 per barrel WTI breakeven targeted for 2028, and the 100,000 barrels a day of upstream growth attached to it. Both are multi-year commitments rather than quarterly events, and the honest way to follow them is through unit costs rather than volumes. Barrels that arrive with rising cost per barrel are not the same achievement.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- IMO (IMPERIAL OIL LIMITED)
- (no filing in the citation store)
- MPC (MARATHON PETROLEUM CORPORATION)
- (no filing in the citation store)
- PSX (Phillips 66)
- (no filing in the citation store)
- VLO (VALERO ENERGY CORP/TX)
- (no filing in the citation store)
- PBF (PBF ENERGY INC.)
- (no filing in the citation store)
- XOM (Exxon Mobil Corporation)
- (no filing in the citation store)
- CVX (Chevron Corp)
- (no filing in the citation store)
- EQNR (EQUINOR ASA)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Suncor Q1 2026 results news release, May 5, 2026 · Suncor Q1 2026 results news release, May 5, 2026; Forbes Advisor crude oil price, July 23, 2026 · fxdailyreport WTI crude analysis, July 21, 2026; Suncor Q2 2026 results release notice, July 21, 2026 · Forbes Advisor crude oil price, July 23, 2026 · Imperial Oil Q1 2026 results, May 1, 2026 · fxdailyreport WTI crude analysis, July 21, 2026 · Suncor Q2 2026 results release notice, July 21, 2026 · Forbes Advisor crude oil price, July 23, 2026; TradingEconomics crude oil, July 24, 2026