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Sunoco (SUN) Declines 4.5% In Spite Of Q2 Earnings Beat
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Sunoco LP’s (SUN - Free Report) units have lost 4.5% in the past four trading sessions despite the partnership reporting strong second-quarter earnings on Aug 5. This reflects concerns about the impact of COVID-19 on the business of this leading U.S. independent fuel distributor.
The partnership reported second-quarter 2020 earnings of 79 cents per unit, beating the Zacks Consensus Estimate of 64 cents. The bottom line also improved from 43 cents in the year-ago quarter. The strong quarterly earnings were aided by higher contributions from fuel distribution and marketing business, partially offset by lower contributions from non-motor fuel sales.
Quarterly revenues of the partnership totaled $2,080 million, missing the Zacks Consensus Estimate of $2,416 million. Also, the figure declined from $4,475 million recorded in the prior-year quarter.
Segmental Performance
The partnership 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 $317 million from $215 million in the comparable period of 2019, primarily due to higher contributions from motor fuel sales.
All Other: This unit reported gross profit of $41 million compared with $54 million in the comparable period of 2019. The year-over-year decline can be attributed to lower contributions from non-motor fuel sales.
In terms of volumes, the partnership sold 1.5 billion gallons of fuel in the reported quarter, down 26.2% year over year owing to the coronavirus pandemic. Notably, motor fuel gross profit per gallon was recorded at 13.5 cents in the quarter, higher than the year-ago level of 9.1 cents.
Distribution
For the quarter ended Jun 30, 2020, Sunoco declared a quarterly cash distribution of 82.55 cents per unit or $3.3020 on an annualized basis. Markedly, this distribution was flat on a sequential basis.
Adjusted distributable cash flow was $122 million in the second quarter compared with $101 million a year ago.
Expenses
Total cost of sales and operating expenses in the reported quarter decreased to $1,872 million from $4,378 million in the year-ago period, primarily due to a drop in other operating expenses.
Capital Expenditure
The partnership incurred gross capital expenditure of $18 million in the quarter under review, comprising $14 million in growth capital and $4 million of maintenance capital.
Balance Sheet
As of Jun 30, 2020, Sunoco had cash and cash equivalents of $33 million. At second quarter-end, it had net long-term debt of $2,894 million, representing a debt to capitalization ratio of 0.83.
Outlook
For 2020, the partnership raised the adjusted EBITDA projection to more than $700 million. Sunoco has reaffirmed its guidance for 2020 growth capital expenditures at roughly $75 million and maintenance capital spending at $30 million.
Moreover, the partnership continues to project 2020 operating expenses – comprising general and administrative, other operating and lease expenses – in the band of $460 to $475 million, suggesting contraction from $501 million in 2019.
Concho is likely to see earnings growth of 21.6% in 2020.
Noble Energy has witnessed upward estimate revisions for its 2020 bottom line in the past 30 days.
EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Sunoco (SUN) Declines 4.5% In Spite Of Q2 Earnings Beat
Sunoco LP’s (SUN - Free Report) units have lost 4.5% in the past four trading sessions despite the partnership reporting strong second-quarter earnings on Aug 5. This reflects concerns about the impact of COVID-19 on the business of this leading U.S. independent fuel distributor.
The partnership reported second-quarter 2020 earnings of 79 cents per unit, beating the Zacks Consensus Estimate of 64 cents. The bottom line also improved from 43 cents in the year-ago quarter. The strong quarterly earnings were aided by higher contributions from fuel distribution and marketing business, partially offset by lower contributions from non-motor fuel sales.
Sunoco LP Price, Consensus and EPS Surprise
Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote
Quarterly revenues of the partnership totaled $2,080 million, missing the Zacks Consensus Estimate of $2,416 million. Also, the figure declined from $4,475 million recorded in the prior-year quarter.
Segmental Performance
The partnership 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 $317 million from $215 million in the comparable period of 2019, primarily due to higher contributions from motor fuel sales.
All Other: This unit reported gross profit of $41 million compared with $54 million in the comparable period of 2019. The year-over-year decline can be attributed to lower contributions from non-motor fuel sales.
In terms of volumes, the partnership sold 1.5 billion gallons of fuel in the reported quarter, down 26.2% year over year owing to the coronavirus pandemic. Notably, motor fuel gross profit per gallon was recorded at 13.5 cents in the quarter, higher than the year-ago level of 9.1 cents.
Distribution
For the quarter ended Jun 30, 2020, Sunoco declared a quarterly cash distribution of 82.55 cents per unit or $3.3020 on an annualized basis. Markedly, this distribution was flat on a sequential basis.
Adjusted distributable cash flow was $122 million in the second quarter compared with $101 million a year ago.
Expenses
Total cost of sales and operating expenses in the reported quarter decreased to $1,872 million from $4,378 million in the year-ago period, primarily due to a drop in other operating expenses.
Capital Expenditure
The partnership incurred gross capital expenditure of $18 million in the quarter under review, comprising $14 million in growth capital and $4 million of maintenance capital.
Balance Sheet
As of Jun 30, 2020, Sunoco had cash and cash equivalents of $33 million. At second quarter-end, it had net long-term debt of $2,894 million, representing a debt to capitalization ratio of 0.83.
Outlook
For 2020, the partnership raised the adjusted EBITDA projection to more than $700 million. Sunoco has reaffirmed its guidance for 2020 growth capital expenditures at roughly $75 million and maintenance capital spending at $30 million.
Moreover, the partnership continues to project 2020 operating expenses – comprising general and administrative, other operating and lease expenses – in the band of $460 to $475 million, suggesting contraction from $501 million in 2019.
Zacks Rank & Stocks to Consider
The partnership currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Concho Resources Inc. , Noble Energy Inc. and EOG Resources, Inc. (EOG - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Concho is likely to see earnings growth of 21.6% in 2020.
Noble Energy has witnessed upward estimate revisions for its 2020 bottom line in the past 30 days.
EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>