RE:It's all about guidance nowI have a feeling SU might underperform in Q4... I hope I'm wrong. They sort of set us up for it with the latest release so that we won't be disappointed when the time comes. If they raise the div though that might be our saving grace. I hope I'm wrong
Obscure1 wrote: We have all heard that markets and individual stocks trade on what is expected to happen 6 months out. The inference is that was has happened in the most recent earnings report is not as important to share prices as what will happen.
From what I can see, the onset of the pandemic has changed the basics in terms of guidance. After the plunge in share prices in March 2020, prognosticators began to look at 2022 and 2023 as being more relevant as 2020 and even 2021 numbers were simply too difficult to predict. In fact, many companies refused to offer guidance in 2020 as they had no clue what their numbers would be (or at least said they had no clue because telling the truth would be too devastating to their share price).
Year over Year growth numbers for 2021 also became somewhat meaningless. When numbers get completely devastated in one year, even modest earnings the following year as companies slowly began to return to normal would deliver huge percentage gains. As an example, the cruise ship lines were reporting hundreds and even thousands percentage gains in their fall 2020 bookings. However, when you fill 100 rooms instead of 10 rooms in a ship that has 1000 rooms, the ship is still empty.
Sorry about the long preamble. I just wanted to put the following comment about SU in context.
On December 13th, Suncor offered its guidance for 2022. The message was clear in that the company expected strong volumes. With high oil prices, it isn't hard to connect the dots.
The December 13th guidance was issued before SU had another round of operational issues that cut production by 190,000 bdp at the base plant for the last two weeksk of December.
On January 18th, Suncor press released the December problems along with the President's message that their operating and safety procedures were not acceptable. The announcement was akin to releasing bad news after the market closes on a Friday so that investors can process the information over the weekend.
The SU share price dropped three dollars that week, assisted by a falling market.
Two things come to mind in regards to the Q4 earnings release after the market closes on Wednesday and the follow up MD&A on Thursday morning.
1) How will the market respond to the late Q4 disappointment which will have a negative effect on what should otherwise be excellent earnings? For the past couple of years, the market has hammered SU for it repeated disappointments. Missed targets and poor performance have become "expected" for Suncor. Will the January 18th Q4 guidance update that caused the share price to drop nearly 10% be enough to compensate for another miss even though the underlying numbers will be outstanding after removing the disruption from the equation?
2) Regardless of how the market reacts to the Q4 numbers, I think the more important message is that Suncor's management has given the market another indication that they are respecting the market. SU has landed itself on the naughty list on the street in the past for not only performing poorly, but for being less than forthcoming in regards to reporting its problems. By providing advance notice of their Q4 operating problems a couple weeks ahead of the MD&A, the company has given analysts enough time to process the information and hopefully be able to sit through the Q&A session without having a chip on their shoulders.
IMO, Suncor's management continues to show signs of respecting the grownups as Experienced likes to call the analysts who reflect the thinking of the street. That is a good thing.