On January 12, Zacks Investment Research upgraded energy pipelines and terminals operator Sunoco Logistics Partners L.P. to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Sunoco Logistics reported strong third quarter 2012 results and appears set to do well again when it reports fourth quarter results shortly.
On November 7, 2012, Sunoco Logistics Partners posted solid third-quarter 2012 profits. The partnership’s earnings per unit (“EPU”) came in at $1.09, significantly ahead of the Zacks Consensus Estimate of 85 cents per unit and the year-ago period profit of 78 cents.
Earnings were primarily aided by higher average crude oil price and lower interest expense. All of its four segments performed well. Operating income in the Crude Oil Pipeline System segment shot up 55.8% from the year-earlier level to $67.0 million, driven by enhanced mix of pipeline movements along with growth in organic projects and better tariff rates.
Importantly, the partnership raised its quarterly distribution by 10.0% sequentially and 25.0% year over year to 51.75 cents per unit or $2.07 per unit annualized. Distributable cash flow increased 37.0% year over year to $149 million.
Moreover, the partnership delivered positive earnings surprises in the last four quarters with an average beat of 45.79%. The long-term expected earnings and sales growth rate for this stock is 10.20% and 8.11%, respectively.
Other Stocks to Consider
Other energy sector stocks worth a look are Cabot Oil and Gas Corporation (COG - Free Report) and Atlas Energy L.P , each carrying a Zacks Rank #1 (Strong Buy).