A month has gone by since the last earnings report for Sunoco LP (
SUN Quick Quote SUN - Free Report) . Shares have lost about 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 its most recent earnings report in order to get a better handle on the important drivers.
Sunoco's Q1 Earnings Beat Estimates
SUN reported first-quarter 2023 earnings of $1.41 per unit, beating the Zacks Consensus Estimate of $1.21. However, the bottom line significantly decreased from the year-ago quarter’s $2.32 per unit.
Total quarterly revenues of $5,362 million missed the Zacks Consensus Estimate of $5,516 million. The top line also declined from $5,402 million a year ago.
Better-than-expected quarterly earnings were primarily driven by higher contributions from the Fuel Distribution and Marketing segment. The positives were partially offset by the higher total cost of sales and operating expenses.
Sunoco’s board of directors announced a quarterly distribution of 84.20 cents per common unit, indicating an increase from the last paid out 82.55 cents. The distribution will be paid out on May 22, 2023, to common unitholders of record as of May 8, 2023.
Sunoco reports financial results through two reportable segments — Fuel Distribution and Marketing, and All Other.
Fuel Distribution and Marketing: Adjusted EBITDA from the segment increased to $195 million from $174 million in the comparable period of 2022 primarily due to higher motor fuel sales. All Other: The unit reported an adjusted EBITDA of $26 million compared with $17 million in the prior-year quarter. The year-over-year increase can be attributed to lower costs of sales.
In terms of volumes, the partnership sold 1,930 million gallons of fuel in the reported quarter, up year over year. Motor fuel gross profit per gallon was 12.9 cents compared with the year-ago level of 12.4 cents.
Distributable Cash Flow
Adjusted distributable cash flow was $160 million in the first quarter, reflecting an increase from the year-ago quarter’s $142 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses in the reported quarter increased to $5,163 million from $5,143 million a year ago.
The partnership incurred a capital expenditure of $37 million in the reported quarter, comprising $29 million in growth capital and $8 million in maintenance capital.
As of Mar 31, 2023, Sunoco had cash and cash equivalents of $189 million. At the first-quarter end, it had a net long-term debt of $2,672 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
Currently, Sunoco LP has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Sunoco LP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.