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Strathcona Resources (TSE:SCR)
TSX:SCR
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Strathcona Resources
(TSX:SCR)
Select Model
Select Model
Rating:69Neutral
Price Target:
C$31.00
▲(15.89% Upside)
The score is driven primarily by solid financial performance (healthy profitability, robust operating cash flow, and improving leverage) and very attractive valuation (low P/E plus dividend yield). These positives are tempered by weaker technicals, with the stock trading below key short-term moving averages and showing soft momentum indicators.
Positive Factors
Revenue Growth
The company's strong revenue growth indicates successful market expansion and product demand, supporting long-term financial health.
Cash Flow Generation
Robust cash flow generation provides financial flexibility for investments or debt reduction, enhancing long-term stability.
Profitability
Strong profitability margins reflect efficient operations and effective cost management, sustaining competitive advantage.
Negative Factors
Increased Leverage
Increased leverage could strain financial flexibility, potentially impacting future investments and operational resilience.
Debt Levels
While manageable, the debt level requires monitoring to avoid financial strain, which could affect long-term growth opportunities.
Market Volatility
Bearish market momentum could affect investor sentiment and stock performance, potentially impacting capital raising efforts.
Strathcona Resources (SCR) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$5.73B
Dividend Yield2.99%
Average Volume (3M)98.08K
Price to Earnings (P/E)5.2
Beta (1Y)1.03
Revenue Growth-11.41%
EPS Growth40.81%
CountryCA
Employees797
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)2.68
Shares Outstanding214,235,610
10 Day Avg. Volume90,167
30 Day Avg. Volume98,082
Financial Highlights & Ratios
PEG Ratio0.00
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$37.33Price Target Upside39.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Strathcona Resources Business Overview & Revenue Model
Company DescriptionStrathcona Resources Ltd. operates as an exploration company. The Company engaged in the acquisition, exploration, development, and production of petroleum and natural gas reserves.
How the Company Makes MoneyStrathcona Resources generates revenue primarily through the exploration, development, and production of oil and gas resources. The company sells crude oil, natural gas, and natural gas liquids to various markets, including domestic and international buyers. Revenue streams are significantly influenced by commodity prices, production volumes, and operational efficiencies. Additionally, the company may engage in strategic partnerships or joint ventures to enhance its operational capabilities and access to new resources, further contributing to its financial performance.
Strathcona Resources Earnings Call Summary
Earnings Call Date:Aug 13, 2024
(Q2-2024)
| % Change Since: |
Next Earnings Date:Mar 31, 2026
Earnings Call Sentiment Neutral
The earnings call reflected a mix of positive achievements such as consistent oil production, improved efficiency, and strategic partnerships for decarbonization, alongside challenges like reduced natural gas production and potential rail strike impacts.Q2-2024 Updates
Positive Updates
Consistent Oil Production and Increased Sales Volume
Oil production for Q2 remained consistent with Q1 at approximately 131,000 barrels per day, while oil sales volumes increased to approximately 135,000 barrels per day due to inventory drawdown.
Debottlenecking Projects Improve Efficiency
Cold Lake projects resulted in an 8% reduction in steam oil ratio compared to the same period in 2023, enhancing operational efficiency.
Commitment to Decarbonization
Announced a $2 billion carbon capture infrastructure partnership with Canada Growth Fund, aiming for a mid-2025 FID for the first project.
Achievement of Debt Target and Dividend Announcement
Achieved debt target of $2.5 billion and announced a quarterly base dividend of $0.25 per share.
Negative Updates
Natural Gas Production Decline
Natural gas production was down 6% from Q1 due to planned and unplanned third-party outages, leading to a reduction in guidance by 15 million cubic feet per day.
Potential Impact of Looming Rail Strike
Concerns about the impact of a potential rail strike on the 30,000 barrel per day crude by rail business and supply chain inputs like diesel.
Deferred Natural Gas Production
Deferral of dry gas production from Groundbirch wells due to third-party outages and low natural gas prices.
Company Guidance
During the Q2 2024 earnings call for Strathcona Resources Limited, significant guidance was provided on various operational and financial metrics. The company reported an average production of approximately 182,000 barrels of oil equivalent (BOE) per day, generating funds from operations of $548 million, or $2.56 per share. Capital expenditures totaled $297 million, resulting in free cash flow of $247 million, or $1.15 per share. Oil production remained consistent with the previous quarter at around 131,000 barrels per day, while oil sales volumes increased to approximately 135,000 barrels per day due to the commissioning of a new crude by rail offloading facility. Natural gas production stood at 237 million cubic feet per day, down 6% from the first quarter, and natural gas liquids production was steady at 11,500 barrels per day. Strathcona announced a reduction in its annual natural gas guidance by 15 million cubic feet per day, adjusting the corporate guidance range to 185,000 to 190,000 BOE per day, with an oil weighting increase to 72%. The company maintained its capital budget guidance at $1.3 billion and achieved its debt target of $2.5 billion by June 30, leading to the approval of a quarterly base dividend of $0.25 per share. Additionally, Strathcona announced a partnership with Canada Growth Fund to develop up to $2 billion in carbon capture infrastructure, targeting a final investment decision by mid-2025. An Investor Day is scheduled for November 14, 2024, to elaborate on near- and long-term asset plans.Strathcona Resources Financial Statement Overview
Summary
Strathcona Resources shows strong financial performance with impressive revenue growth and profitability. The income statement is robust, and cash flow generation is solid, providing financial flexibility. Despite increased leverage, the overall financial health remains strong.Income Statement
Strathcona Resources demonstrates strong revenue growth with a substantial increase from 2022 to 2023. The gross profit margin is healthy at 25.8%, and the net profit margin stands at 13.9%, indicating solid profitability. EBIT and EBITDA margins are robust at 23.6% and 41.6%, respectively, reflecting efficient operational management. The company has shown significant improvement in revenue and profitability over the years.Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 0.58, suggesting manageable leverage. Return on equity is impressive at 11.0%, indicating effective use of equity capital. The equity ratio is 50.7%, showing a balanced capital structure. While the company has increased its assets and equity significantly, the rise in debt requires careful monitoring.Cash Flow
Free cash flow has grown substantially, supported by strong operating cash flow, with a high operating cash flow to net income ratio of 2.60. Free cash flow to net income ratio is 0.85, reflecting solid cash generation ability. The company’s cash flow management appears strong, providing flexibility for future investments or debt reduction.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.26B | 4.75B | 4.24B | 3.75B | 376.93M | 131.76M |
| Gross Profit | 1.17B | 1.30B | 1.09B | 1.29B | 180.82M | -5.33M |
| EBITDA | 1.67B | 2.01B | 1.85B | 1.51B | 179.27M | 47.24M |
| Net Income | 1.10B | 603.70M | 587.20M | 1.36B | 67.92M | -17.28M |
Balance Sheet | ||||||
| Total Assets | 11.05B | 10.98B | 10.50B | 9.16B | 886.17M | 694.47M |
| Cash, Cash Equivalents and Short-Term Investments | 1.29B | 0.00 | 0.00 | 34.30M | 0.00 | 0.00 |
| Total Debt | 1.29B | 2.81B | 3.07B | 3.30B | 333.48M | 259.82M |
| Total Liabilities | 4.41B | 5.15B | 5.17B | 4.96B | 462.53M | 339.41M |
| Stockholders Equity | 6.64B | 5.82B | 5.33B | 4.20B | 423.64M | 355.06M |
Cash Flow | ||||||
| Free Cash Flow | 227.80M | 656.20M | 497.90M | 834.40M | -33.11M | -62.35M |
| Operating Cash Flow | 1.72B | 1.99B | 1.52B | 1.46B | 157.86M | 41.64M |
| Investing Cash Flow | -678.90M | -1.30B | -999.40M | -3.04B | -187.63M | -103.21M |
| Financing Cash Flow | -1.04B | -694.50M | -559.60M | 1.62B | 29.77M | 32.93M |
Strathcona Resources Technical Analysis
Negative
26.75
Price Trends
30.14
Negative
28.79
Negative
25.24
Positive
Market Momentum
-0.93
Positive
40.43
Neutral
2.82
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SCR, the sentiment is Negative. The current price of 26.75 is below the 20-day moving average (MA) of 30.09, below the 50-day MA of 30.14, and above the 200-day MA of 25.24, indicating a neutral trend. The MACD of -0.93 indicates Positive momentum. The RSI at 40.43 is Neutral, neither overbought nor oversold. The STOCH value of 2.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SCR.
Strathcona Resources Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | C$4.44B | 11.73 | 13.48% | 5.77% | 11.52% | 24.76% | |
74 Outperform | C$3.48B | 11.07 | 13.57% | ― | -6.14% | 14.09% | |
70 Neutral | C$1.92B | 26.45 | 3.16% | 1.59% | -9.76% | 374.65% | |
69 Neutral | C$5.73B | 5.17 | 9.60% | 2.99% | -11.41% | 40.81% | |
67 Neutral | $3.77B | -39.66 | -4.70% | 1.91% | -1.36% | -149.45% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
58 Neutral | $1.85B | 30.58 | 3.69% | ― | 27.84% | 28.87% |
* Energy Sector Average
TSE:SCR
Strathcona Resources
26.75
4.22
18.73%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.