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We expect the energy pipelines and terminals operator Sunoco Logistics Partners L.P. (SXL - Analyst Report) to beat expectations when it reports fourth quarter 2012 results after the closing bell on Wednesday, Feb 20.

Why a Likely Positive Surprise?

Our proven model shows that Sunoco Logistics is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), the difference between the Most Accurate estimate of 99 cents and the Zacks Consensus Estimate of 91 cents, stands at +8.79%.

Zacks #3 Rank (Neutral): Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement. 

The combination of Sunoco’s Zacks Rank #3 (Hold) and 8.79% ESP makes us confident in looking for a positive earnings beat on Feb 20.

What's Driving the Better than Expected Earnings?

The partnership continues to progress well on its growth initiatives as evident from the recent successful completions of open seasons for the Permian Express Phase I, Allegheny Access and Mariner East projects.

Sunoco Logistics has delivered solid earnings results in the third quarter, beating the Zacks Consensus Estimate by 28.24%. In fact, it delivered positive earnings surprises in each of the past 4 quarters, leading to a positive average earnings surprise of 45.79%.

Most estimates were revised higher after the announcement of third quarter results. Over the last 60 days, the Zacks Consensus Estimate for the fourth quarter of 2012 grew 2.25% to 91 cents per share.

With its low-risk and stable cash flow-generating energy infrastructure assets, Sunoco Logistics offers investors an opportunity to capture income growth through steadily rising cash distributions and capital appreciation.

Other Stocks to Consider

Here are some other companies that warrant a look as these have the right ingredients to report an earnings beat this quarter:

Northern Tier Energy LP (NTI - Snapshot Report), earnings ESP of +3.65% and Zacks Rank #1 (Strong Buy).

Western Refining Inc. (WNR - Analyst Report), earnings ESP of +6.30% and Zacks Rank #2 (Buy).

W&T Offshore Inc. (WTI - Snapshot Report), earnings ESP of +20.83% and Zacks Rank #3 (Hold).

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