It has been about a month since the last earnings report for Sunoco LP (SUN Quick QuoteSUN - Free Report) . Shares have added about 2.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sunoco LP due for a pullback? 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 catalysts.

Sunoco's Q1 Earnings Beat Estimates, Surges Y/Y

Sunoco LP announced first-quarter 2019 earnings per unit of 52 cents, beating the Zacks Consensus Estimate of 50 cents. Moreover, the bottom line jumped from the year-ago level of 10 cents. The strong first-quarter earnings were supported by lower cost of sales and operating expenses.

Quarterly operating revenues of the partnership totaled $3,692 million, lagging the Zacks Consensus Estimate of $3,728 million. Also, the figure declined from $3,749 million recorded in the prior-year quarter. The top line was affected by lower non-motor fuel sales.

Segmental Performance

The partnership reports financial statements through two reportable segments — Fuel Distribution and Marketing and All Other. Subsequent to the Retail Divestment and conversion of 207 retail sites to commission agent sites, Sunoco renamed the former Wholesale segment to Fuel Distribution and Marketing, and the Retail segment to All Other.

Fuel Distribution and Marketing: Total gross profit from the segment increased to $307 million from $190 million in the comparable period of 2018, primarily due to higher motor fuel sales.

All Other: This unit reported gross profit of $63 million compared with $106 million in the comparable period of 2018. The year-over-year decline was attributed to lower motor and non-motor fuel sales.

Distribution

For the quarter ended Mar 31, 2019, Sunoco declared a quarterly cash distribution of 82.55 cents per unit, or $3.3020 per unit on an annualized basis. The distribution will be paid on May 15 to unitholders of record at the close of business on May 7.

Expenses
Total expenses in the reported quarter decreased to $3,540 million from $3,653 million in the year-ago period. The decline in total expenses is mainly attributed to lower costs related to sale.

Balance Sheet & Capital Expenditure

As of Mar 31, 2019, Sunoco had cash and cash equivalents of $23 million, and a long-term debt (including revolving credit) of $3,029 million. The debt-to-capitalization ratio was approximately 79%. The company incurred gross capital expenditure of $26 million in the quarter under review.
For 2019, the partnership is planning to allocate around $90 million for growth purposes and $45 million for maintenance.

Signs LOI

Sunoco signed a non-binding letter of intent (LOI) to enter into a joint venture with Energy Transfer LP on a diesel fuel pipeline. The pipeline will be operated by Energy Transfer, which will deliver diesel with an initial capacity of 30,000 barrels per day from Hebert, TX to a terminal located in Midland, TX. It is expected to come online by the end of 2019. Sunoco anticipates its cash expenditure for this project at around $50 million.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Sunoco LP has a great 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

Sunoco LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.