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Why Is Sunoco LP (SUN) Down 1.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 1.1% 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 catalysts.
Sunoco reported second-quarter 2019 earnings per unit of 43 cents from continuing operations, missing the Zacks Consensus Estimate of 74 cents. Moreover, the bottom line plunged from the year-ago level of 90 cents.
Quarterly operating revenues of the partnership totaled $4,475 million, beating the Zacks Consensus Estimate of $4,323 million. However, the figure declined from $4,607 million recorded in the prior-year quarter.
The weak second-quarter earnings were affected by lower profits from both the segments of the partnership, attributed to lower motor fuel gross profit per gallon. The negatives were partially offset by higher fuel selling volumes in the quarter under review.
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 decreased to $215 million from $253 million in the comparable period of 2018, primarily due to lower Motor and Non-motor fuel sales.
All Other:This unit reported gross profit of $54 million compared with $57 million in the comparable period of 2018. The year-over-year decline was attributed to lower Motor fuel sales.
In terms of volumes, the partnership sold 2.05 billion gallons of fuel in the reported quarter, up 4% year over year. Motor fuel gross profit per gallon was recorded at 9.1 cents in the quarter, lower than the year-ago level of 9.9 cents.
Distribution
For the quarter ended Jun 30, 2019, Sunoco declared a quarterly cash distribution of 82.55 cents per unit, or $3.3020 on an annualized basis. Markedly, this distribution is flat on a sequential basis.
Expenses Total expenses in the reported quarter decreased to $4,378 million from $4,479 million in the year-ago period. The decline in total expenses is mainly attributed to lower costs related to sale.
Capital Expenditure
The company incurred gross capital expenditure of $31 million in the quarter under review, including $25 million of growth capital and $6 million of maintenance capital.
Balance Sheet
As of Jun 30, 2019, Sunoco had cash and cash equivalents of $36 million, and a long-term debt (including revolving credit) of $2,995 million. Its debt-to-capitalization ratio was approximately 79.4%.
Joint Venture Update
Sunoco closed the joint venture with Energy Transfer LP (ET) 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. This pipeline is successfully commissioned in August. Sunoco anticipates cash expenditure for this project to be around $50 million.
Guidance
Sunoco expects full-year 2019 operating expenses to be lower than the guided figure of $540 million, owing to the Fulton ethanol plant divestment. The sale of the plant is anticipated to affect the partnership’s gross profit this year.
In 2019, the partnership is planning to allocate around $100 million for growth purposes and $40 million for maintenance.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Sunoco LP has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sunoco LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Sunoco LP (SUN) Down 1.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Sunoco LP (SUN - Free Report) . Shares have lost about 1.1% 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 catalysts.
Sunoco Misses Q2 Earnings Estimates, Revenues Beat
Sunoco reported second-quarter 2019 earnings per unit of 43 cents from continuing operations, missing the Zacks Consensus Estimate of 74 cents. Moreover, the bottom line plunged from the year-ago level of 90 cents.
Quarterly operating revenues of the partnership totaled $4,475 million, beating the Zacks Consensus Estimate of $4,323 million. However, the figure declined from $4,607 million recorded in the prior-year quarter.
The weak second-quarter earnings were affected by lower profits from both the segments of the partnership, attributed to lower motor fuel gross profit per gallon. The negatives were partially offset by higher fuel selling volumes in the quarter under review.
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 decreased to $215 million from $253 million in the comparable period of 2018, primarily due to lower Motor and Non-motor fuel sales.
All Other:This unit reported gross profit of $54 million compared with $57 million in the comparable period of 2018. The year-over-year decline was attributed to lower Motor fuel sales.
In terms of volumes, the partnership sold 2.05 billion gallons of fuel in the reported quarter, up 4% year over year. Motor fuel gross profit per gallon was recorded at 9.1 cents in the quarter, lower than the year-ago level of 9.9 cents.
Distribution
For the quarter ended Jun 30, 2019, Sunoco declared a quarterly cash distribution of 82.55 cents per unit, or $3.3020 on an annualized basis. Markedly, this distribution is flat on a sequential basis.
Expenses
Total expenses in the reported quarter decreased to $4,378 million from $4,479 million in the year-ago period. The decline in total expenses is mainly attributed to lower costs related to sale.
Capital Expenditure
The company incurred gross capital expenditure of $31 million in the quarter under review, including $25 million of growth capital and $6 million of maintenance capital.
Balance Sheet
As of Jun 30, 2019, Sunoco had cash and cash equivalents of $36 million, and a long-term debt (including revolving credit) of $2,995 million. Its debt-to-capitalization ratio was approximately 79.4%.
Joint Venture Update
Sunoco closed the joint venture with Energy Transfer LP (ET) 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. This pipeline is successfully commissioned in August. Sunoco anticipates cash expenditure for this project to be around $50 million.
Guidance
Sunoco expects full-year 2019 operating expenses to be lower than the guided figure of $540 million, owing to the Fulton ethanol plant divestment. The sale of the plant is anticipated to affect the partnership’s gross profit this year.
In 2019, the partnership is planning to allocate around $100 million for growth purposes and $40 million for maintenance.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Sunoco LP has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sunoco LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.