A month has gone by since the last earnings report for Sunoco LP (SUN Quick QuoteSUN - Free Report) . Shares have lost about 2.4% 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 the most recent earnings report in order to get a better handle on the important drivers.

Sunoco Q1 Earnings Beat Estimates

Sunoco LP reported first-quarter 2024 earnings per share (EPS) of $2.26, which beat the Zacks Consensus Estimate of $1.06. The bottom line also increased from the year-ago quarter’s earnings of $1.41.  

Total quarterly revenues of $5.49 billion beat the Zacks Consensus Estimate of $5.13 billion. The top line increased from the $5.36 billion reported a year ago.

The strong quarterly results can be attributed to increased revenues from the fuel distribution and marketing segment.

Segmental Performance

Sunoco reports financial results through two reportable segments — Fuel Distribution and Marketing, and All Other.

Fuel Distribution and Marketing: Total revenues in the segment increased to $5.31 billion from $5.17 billion in the comparable period of 2023, primarily due to higher motor fuel sales. The reported figure also beat our estimate of $4.8 billion.

All Other: The unit reported total revenues of $190 million compared with $196 million in the prior-year quarter. The year-over-year downside can be attributed to lower motor and non-motor fuel sales. Our estimate for the same was pinned at $188 million.

In terms of volumes, the partnership sold 2.1 billion gallons of fuel in the reported quarter, up 9% from the first quarter of 2023. The metric also beat our estimate of 1.9 billion gallons.

Motor fuel gross profit per gallon was 11.7 cents compared with the year-ago level of 12.9 cents.

Sunoco reported a total operating income of $297 million, which increased from the $199 million reported in the prior-year quarter. The figure also beat our estimate of $161.7 million.

For the quarter ended Mar 31, 2024, the net income was $230 million versus $141 million in the first quarter of 2023. The figure also beat our estimate of $108.6 million.

Distributable Cash Flow

The adjusted distributable cash flow totaled $176 million in the first quarter, up from the year-ago level of $160 million.

Expenses & Capital Expenditure

The total cost of sales and operating expenses in the reported quarter increased to $5.20 billion from $5.16 billion a year ago.

The partnership incurred a capital expenditure of $41 million in the first quarter, comprising $27 million in growth capital and $14 million in maintenance capital.

Balance Sheet

As of Mar 31, 2024, Sunoco had cash and cash equivalents of $215 million and a net long-term debt of $3.8 billion.

Guidance

For 2024, the partnership raised its expected adjusted EBITDA from $975 million to $1 billion, expanding the range to $1.46 billion to $1.52 billion for the acquisition of NuStar Energy L.P. This expected range represents an increase from the $964 million reported in 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 20.51% due to these changes.

VGM Scores

At this time, Sunoco LP has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sunoco LP has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Sunoco LP belongs to the Zacks Oil and Gas - Refining and Marketing - Master Limited Partnerships industry. Another stock from the same industry, Targa Resources, Inc. (TRGP Quick QuoteTRGP - Free Report) , has gained 3.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Targa Resources reported revenues of $4.56 billion in the last reported quarter, representing a year-over-year change of +0.9%. EPS of $1.22 for the same period compares with $0.03 a year ago.

For the current quarter, Targa Resources is expected to post earnings of $1.18 per share, indicating a change of -18.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.2% over the last 30 days.

Targa Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.