Suncor Energy (TSX:SU) and Cenovus Energy (TSX:CVE), two of Canada's energy giants, have much to offer investors looking to tap into the oil and gas sector. Both energy stocks are prominent players, but each has taken different paths recently, with distinct strengths and challenges shaping future trajectories. To decide which might be the better buy, it's crucial to explore their recent earnings, past performance, and future outlook. So, let's get into it.

Looking back

Suncor stock has enjoyed a strong resurgence in 2024. Its third-quarter earnings soared to $2.02 billion, a significant leap from $1.54 billion in the same period the previous year. This success stems largely from impressive operational performance, including a record refinery utilization rate of 105%, processing 488,000 barrels per day. On the production side, Suncor has also made strides, increasing upstream output by 20% to 828,600 barrels per day.

Meanwhile, Cenovus struggled in its latest quarter, with net income tumbling to $820 million, down from $1.86 billion a year earlier. The drop was largely due to lower production and throughput volumes and weaker commodity prices, which have taken a toll on its financial results.

Historically, Suncor stock has been a bit of a turnaround story in recent years. Under the leadership of Chief Executive Officer Rich Kruger, the company prioritized operational efficiency and boosted production, which translated into better stock performance. Over the past year, Suncor stock rose by 29%, outpacing not just Cenovus but also other oil sands peers.

In contrast, Cenovus faced headwinds, with profitability and production issues dampening its momentum. However, it showed commitment to shareholder returns, tripling its base dividend in 2022 and implementing a plan to return 50% of quarterly excess free funds flow to shareholders once its net debt falls below $9 billion.

Future outlook

Looking ahead, Suncor stock appears well-positioned to continue its upward trajectory. It is on track to exceed its 2024 oil production and refinery throughput targets, demonstrating strong operational resilience. The company also achieved its net debt goal ahead of schedule. Suncor plans to return 100% of its free cash flow to shareholders.

Cenovus, while currently underperforming Suncor stock, has reason for optimism, too. With planned maintenance activities now behind it, the company is poised for stronger operations in the coming quarters. Furthermore, the completion of the Trans Mountain Pipeline expansion is expected to benefit Cenovus significantly by increasing Canada's oil export capacity and potentially narrowing the price gap between Western Canadian Select and West Texas Intermediate.

On valuation, Suncor stock currently offers a forward annual dividend rate of $2.28, yielding 4.09% at writing, with a conservative payout ratio of 35.05%. Its market cap stands at $70.03 billion, and its trailing price-to-earnings (P/E) ratio is a modest 8.96, suggesting the stock is reasonably priced relative to its earnings. Cenovus, while smaller with a market cap of $40.51 billion, has a trailing P/E ratio of 11.15 and offers a forward annual dividend of $0.72, yielding 3.25%. Its payout ratio is slightly higher at 38.94%, reflecting a different approach to capital allocation and dividend policy.

Foolish takeaway

Deciding between the two comes down to individual investor goals. Suncor may appeal more to those looking for a combination of income and stability. Bolstered by its strong operational metrics and clear capital-return strategy. However, Cenovus might attract investors who are more growth-oriented. Those willing to take on some risk in exchange for potentially higher returns as Cenovus's production and market conditions improve. Both companies are solid choices. However, differences mean one might be a better fit than the other, depending on the specific investment strategy.

Ultimately, Suncor stock's recent success and clear direction make it a slightly more compelling option. The company has consistently executed its goals and demonstrated resilience in a competitive market. However, Cenovus cannot be discounted entirely, particularly for those who believe in its turnaround potential and the benefits it may reap from broader industry developments. The final decision, as always, should align with an investor's financial objectives and risk tolerance.