Contrasting SM Energy (NYSE:SM) & Suncor Energy (NYSE:SU)

SM Energy (NYSE:SM) and Suncor Energy (NYSE:SU) are both energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Institutional & Insider Ownership

94.6% of SM Energy shares are owned by institutional investors. Comparatively, 67.4% of Suncor Energy shares are owned by institutional investors. 0.5% of SM Energy shares are owned by company insiders. Comparatively, 1.0% of Suncor Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

SM Energy has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Suncor Energy has a beta of 0.22, meaning that its stock price is 78% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for SM Energy and Suncor Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SM Energy	0	7	10	1	2.67
Suncor Energy	0	1	5	3	3.22

SM Energy presently has a consensus target price of $39.82, suggesting a potential upside of 27.98%. Suncor Energy has a consensus target price of $81.71, suggesting a potential upside of 18.50%. Given SM Energy’s higher probable upside, research analysts clearly believe SM Energy is more favorable than Suncor Energy.

Valuation & Earnings

This table compares SM Energy and Suncor Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SM Energy	$3.15 billion	2.32	$648.00 million	$4.12	7.55
Suncor Energy	$35.29 billion	2.26	$4.24 billion	$6.80	10.14

Suncor Energy has higher revenue and earnings than SM Energy. SM Energy is trading at a lower price-to-earnings ratio than Suncor Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SM Energy and Suncor Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SM Energy	13.69%	20.48%	8.43%
Suncor Energy	17.49%	25.55%	12.86%

Dividends

SM Energy pays an annual dividend of $0.88 per share and has a dividend yield of 2.8%. Suncor Energy pays an annual dividend of $1.73 per share and has a dividend yield of 2.5%. SM Energy pays out 21.4% of its earnings in the form of a dividend. Suncor Energy pays out 25.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SM Energy has increased its dividend for 4 consecutive years and Suncor Energy has increased its dividend for 4 consecutive years. SM Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Suncor Energy beats SM Energy on 10 of the 17 factors compared between the two stocks.

About SM Energy

SM Energy Company is an independent oil and gas company focused on acquiring, exploring, developing and producing crude oil, natural gas and natural gas liquids. Its operations are concentrated in Texas, including the Midland Basin in the Permian Basin and the South Texas region. The company’s business includes developing oil and gas properties and managing the infrastructure and operations needed to bring production to market. Its portfolio has evolved over time as SM Energy has made acquisitions and divested assets to focus on its core areas.

About Suncor Energy

Suncor Energy Inc. is an integrated energy company headquartered in Calgary, Alberta. Its operations span the energy value chain, from producing and processing crude oil to refining, marketing and distributing fuel products. The company’s upstream business includes oil sands development and upgrading in Alberta, as well as conventional and offshore oil and gas production. Its refining and marketing operations serve customers in Canada and the United States, selling products such as gasoline, diesel and jet fuel under brands including Petro-Canada.