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Growth & Income

Sunoco Logistics Partners L.P. (SXL - Analyst Report) is an MLP that yields an impressive 5.6%. The partnership has delivered 23 consecutive distribution increases, even throughout 2009 when oil prices plunged.

Based on the Zacks Consensus Estimates, earnings are expected to grow 10% per year for the next two years. It trades at 16.1x forward earnings, a discount to the industry average.

SXL is a Zacks #2 Rank (Buy).

About the Business

Sunoco Logistics Partners L.P. is a master limited partnership that owns and operates refined products and crude oil pipelines and terminal facilities.

It is headquartered in Philadelphia, Pennsylvania and has a market cap of $2.9 billion.

Income

The partnership has a history of consistently raising its distribution, even when oil prices tumbled in 2009. It recently raised its distribution for the 23rd straight quarter:

SXL: Sunoco Logistics Partners L.P.

It currently yields an impressive 5.6%.

Fourth Quarter Results

Sunoco reported its results for the fourth quarter of 2010 on January 28. Total revenues came in at $2.228 billion, a 33.6% increase over the same quarter in 2009 due in part to an acquisition.

The gross margin per barrel of pipeline throughout fell from 60.4 cents to 42.4 cents, but the crude oil pipeline throughout more than doubled to nearly 1.5 million barrels per day. Operating income rose 25.8%.

Meanwhile, distributable cash flow increased 38% to $69 million.

Earnings per unit was $1.42, in-line with the Zacks Consensus Estimate. It was a 9.2% increase over the same quarter in 2009.

Growth

Analysts are projecting double-digits growth rates for SXL over the next two years. The Zacks Consensus Estimate for 2011 is $5.41, representing 10% earnings growth. The 2012 consensus estimate is also 10% higher at $5.93.

It is a Zacks #2 Rank (Buy) stock.

Valuation

SXL trades at 16.1x forward earnings, a discount to the industry average of 20.6x.

Its price to book ratio of 2.8 is a bit higher than the peer group multiple of 2.2. This premium is justified, however, by its superior returns on equity. In the last 12 months, for instance, its ROE was 23.0% compared to the industry average of 10.5%.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.