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Sunoco LP (SUN) Down 3.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 3.6% 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 its most recent earnings report in order to get a better handle on the important drivers.
Sunoco Misses on Q4 Earnings Estimates
Sunoco reported fourth-quarter 2021 earnings of 95 cents per unit, which missed the Zacks Consensus Estimate of $1.14. However, the bottom line increased from adjusted earnings of 77 cents in the year-ago quarter.
Total quarterly revenues of $4,954 million beat the Zacks Consensus Estimate of $4,951 million. The top line also increased from $2,553 million a year ago.
The lower-than-expected earnings can be attributed to higher costs of sales and operating expenses. The negatives were partially offset by higher motor fuel and non-motor fuel sales.
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 increased to $291 million from $249 million in the comparable period of 2020 primarily due to higher motor fuel sales.
All Other: The unit reported a gross profit of $48 million versus $33 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 1.9 billion gallons of fuel in the reported quarter, up 3.1% year over year, owing to the energy demand recovery from the coronavirus pandemic. Motor fuel gross profit per gallon was recorded at 12 cents for the quarter versus the year-ago level of 9.2 cents.
Distribution
For the quarter ended Dec 31, 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 1.56X.
Adjusted distributable cash flow was $143 million in the fourth quarter, reflecting an increase from the year-ago quarter’s $97 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses for the reported quarter surged to $4,778 million from $2,409 million a year ago.
The partnership incurred a gross capital expenditure of $82 million for the reported quarter, comprising $65 million in growth capital and $17 million in maintenance capital.
Balance Sheet
As of Dec 31, 2021, Sunoco had cash and cash equivalents of $25 million, sequentially down from $88 million. At the fourth-quarter end, it had net long-term debt of $2,668 million, marginally down from $2,672 million at the third-quarter end. It had a long-term debt to capitalization of 76.7%.
Guidance
For 2022, Sunoco projects adjusted EBITDA at $770-$810 million. In 2021, the metric was recorded at $754 million. The partnership expects operating expenses of $490-$500 million,
The partnership expects fuel volumes of 7.7-8.1 billion gallons for the year, indicating a rise from the 2021 level of 7.55 billion gallons. Fuel margins will likely be 10.5-11.5 cents per gallon. The same in 2021 was 11.2 cents per gallon. Notably, Sunoco expects maintenance and growth capex of $50 and $150 million, respectively, for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.5% due to these changes.
VGM Scores
At this time, Sunoco LP has a poor Growth Score of F, however its Momentum Score is doing a bit better 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Sunoco LP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Sunoco LP (SUN) Down 3.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 3.6% 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 its most recent earnings report in order to get a better handle on the important drivers.
Sunoco Misses on Q4 Earnings Estimates
Sunoco reported fourth-quarter 2021 earnings of 95 cents per unit, which missed the Zacks Consensus Estimate of $1.14. However, the bottom line increased from adjusted earnings of 77 cents in the year-ago quarter.
Total quarterly revenues of $4,954 million beat the Zacks Consensus Estimate of $4,951 million. The top line also increased from $2,553 million a year ago.
The lower-than-expected earnings can be attributed to higher costs of sales and operating expenses. The negatives were partially offset by higher motor fuel and non-motor fuel sales.
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 increased to $291 million from $249 million in the comparable period of 2020 primarily due to higher motor fuel sales.
All Other: The unit reported a gross profit of $48 million versus $33 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 1.9 billion gallons of fuel in the reported quarter, up 3.1% year over year, owing to the energy demand recovery from the coronavirus pandemic. Motor fuel gross profit per gallon was recorded at 12 cents for the quarter versus the year-ago level of 9.2 cents.
Distribution
For the quarter ended Dec 31, 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 1.56X.
Adjusted distributable cash flow was $143 million in the fourth quarter, reflecting an increase from the year-ago quarter’s $97 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses for the reported quarter surged to $4,778 million from $2,409 million a year ago.
The partnership incurred a gross capital expenditure of $82 million for the reported quarter, comprising $65 million in growth capital and $17 million in maintenance capital.
Balance Sheet
As of Dec 31, 2021, Sunoco had cash and cash equivalents of $25 million, sequentially down from $88 million. At the fourth-quarter end, it had net long-term debt of $2,668 million, marginally down from $2,672 million at the third-quarter end. It had a long-term debt to capitalization of 76.7%.
Guidance
For 2022, Sunoco projects adjusted EBITDA at $770-$810 million. In 2021, the metric was recorded at $754 million. The partnership expects operating expenses of $490-$500 million,
The partnership expects fuel volumes of 7.7-8.1 billion gallons for the year, indicating a rise from the 2021 level of 7.55 billion gallons. Fuel margins will likely be 10.5-11.5 cents per gallon. The same in 2021 was 11.2 cents per gallon. Notably, Sunoco expects maintenance and growth capex of $50 and $150 million, respectively, for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.5% due to these changes.
VGM Scores
At this time, Sunoco LP has a poor Growth Score of F, however its Momentum Score is doing a bit better 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Sunoco LP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.