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Why Is Sunoco LP (SUN) Down 4.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sunoco LP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sunoco Misses on Q3 Earnings Estimates
Sunoco reported third-quarter earnings of $1 per unit, which missed the Zacks Consensus Estimate of $1.06. The bottom line, however, increased from adjusted earnings of 96 cents in the year-ago quarter.
Total quarterly revenues of the partnership totaled $4,779 million, beating the Zacks Consensus Estimate of $3,929 million. The figure also increased from $2,805 million a year ago.
Segmental Performance
Sunoco reports financial statements through two reportable segments — Fuel Distribution and Marketing, and All Other.
Fuel Distribution and Marketing: Total gross profit from the segment decreased to $261 million from $265 million in the comparable period of 2020 primarily due to lower motor fuel sales.
All Other: This unit reported a gross profit of $46 million versus $43 million in the comparable period of 2020. The year-over-year increase can be attributed to higher non-motor fuel sales.
In terms of volumes, the partnership sold almost 2 billion gallons of fuel in the reported quarter, up 6.4% year over year, owing to the energy demand recovery from the coronavirus pandemic. Motor fuel gross profit per gallon was recorded at 11.3 cents for the quarter versus the year-ago level of 12.1 cents.
Distribution
For the quarter ended Sep 30, 2021, Sunoco declared a quarterly cash distribution of 82.55 cents per unit or $3.3020 on an annualized basis. Markedly, the distribution was flat on a sequential basis. Trailing 12 months’ cash coverage was 1.43X.
Adjusted distributable cash flow was $146 million for the third quarter, reflecting an increase from the year-ago quarter’s $139 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses for the reported quarter surged to $4,626 million from $2,658 million a year ago.
The partnership incurred a gross capital expenditure of $44 million for the reported quarter, comprising $34 million in growth capital and $10 million in maintenance capital.
Balance Sheet
As of Sep 30, 2021, Sunoco had cash and cash equivalents of $88 million, sequentially up from $87 million. At the third-quarter end, it had net long-term debt of $2,672 million, marginally down from $2,673 million at the second-quarter end. It had a long-term debt to capitalization of 77%.
Guidance
For 2021, Sunoco reiterated its adjusted EBITDA guidance to $725-$765 million. In 2020, the metric was recorded at $739 million. It expects operating expenses of $425-$435 million, marking a decline from $440-$450 million mentioned earlier.
The partnership expects fuel volumes for the year within 7.25-7.75 billion gallons, indicating a rise from the 2020 level of 7.09 billion gallons. Fuel margins will likely be 11-12 cents per gallon. The same in 2020 was 11.9 cents per gallon. SUN expects maintenance and growth capex of $45 and $150 million, respectively, for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Sunoco LP has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sunoco LP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Sunoco LP (SUN) Down 4.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sunoco LP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sunoco Misses on Q3 Earnings Estimates
Sunoco reported third-quarter earnings of $1 per unit, which missed the Zacks Consensus Estimate of $1.06. The bottom line, however, increased from adjusted earnings of 96 cents in the year-ago quarter.
Total quarterly revenues of the partnership totaled $4,779 million, beating the Zacks Consensus Estimate of $3,929 million. The figure also increased from $2,805 million a year ago.
Segmental Performance
Sunoco reports financial statements through two reportable segments — Fuel Distribution and Marketing, and All Other.
Fuel Distribution and Marketing: Total gross profit from the segment decreased to $261 million from $265 million in the comparable period of 2020 primarily due to lower motor fuel sales.
All Other: This unit reported a gross profit of $46 million versus $43 million in the comparable period of 2020. The year-over-year increase can be attributed to higher non-motor fuel sales.
In terms of volumes, the partnership sold almost 2 billion gallons of fuel in the reported quarter, up 6.4% year over year, owing to the energy demand recovery from the coronavirus pandemic. Motor fuel gross profit per gallon was recorded at 11.3 cents for the quarter versus the year-ago level of 12.1 cents.
Distribution
For the quarter ended Sep 30, 2021, Sunoco declared a quarterly cash distribution of 82.55 cents per unit or $3.3020 on an annualized basis. Markedly, the distribution was flat on a sequential basis. Trailing 12 months’ cash coverage was 1.43X.
Adjusted distributable cash flow was $146 million for the third quarter, reflecting an increase from the year-ago quarter’s $139 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses for the reported quarter surged to $4,626 million from $2,658 million a year ago.
The partnership incurred a gross capital expenditure of $44 million for the reported quarter, comprising $34 million in growth capital and $10 million in maintenance capital.
Balance Sheet
As of Sep 30, 2021, Sunoco had cash and cash equivalents of $88 million, sequentially up from $87 million. At the third-quarter end, it had net long-term debt of $2,672 million, marginally down from $2,673 million at the second-quarter end. It had a long-term debt to capitalization of 77%.
Guidance
For 2021, Sunoco reiterated its adjusted EBITDA guidance to $725-$765 million. In 2020, the metric was recorded at $739 million. It expects operating expenses of $425-$435 million, marking a decline from $440-$450 million mentioned earlier.
The partnership expects fuel volumes for the year within 7.25-7.75 billion gallons, indicating a rise from the 2020 level of 7.09 billion gallons. Fuel margins will likely be 11-12 cents per gallon. The same in 2020 was 11.9 cents per gallon. SUN expects maintenance and growth capex of $45 and $150 million, respectively, for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Sunoco LP has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sunoco LP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.