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Is a Beat in Store for Sunoco (SUN) This Earnings Season?

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Sunoco LP (SUN - Free Report) is set to report first-quarter 2020 results on May 11, after the closing bell.  

In the last reported quarter, the partnership reported earnings of 75 cents per unit that beat the Zacks Consensus Estimate of 62 cents on higher contributions from fuel distribution and marketing business.

Notably, the leading distributor of motor fuel beat earnings estimates twice and missed twice in the last four reported quarters, the average negative surprise being 11.64%, as shown in the chart below.

Sunoco LP Price and EPS Surprise

 

Sunoco LP Price and EPS Surprise

Sunoco LP price-eps-surprise | Sunoco LP Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings of 89 cents has seen two upward revisions and no downward movement in the past 30 days. The figure suggests a year-over-year improvement of 71.2%.

Further, the Zacks Consensus Estimate for revenues is pegged at $3.8 billion, indicating an improvement of 1.5% from the year-ago reported figure.

Factors to Note

With its huge fuel distribution network, the partnership generates stable earnings by distributing multiple fuel brands across 30 states. The Zacks Consensus Estimate for Sunoco’s motor fuel gross profit per gallon is pinned at 10.25 cents, suggesting an improvement from 9.9 cents in the March quarter of 2019.  

Also, in terms of volumes, the consensus estimates for motor fuel sold is pegged at 1,998 million gallons, indicating a rise from 1,941 million gallons in the year-ago quarter. Thus, the expected spurt in volumes is likely to have aided gross profit.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Sunoco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: The partnership’s Earnings ESP is +14.75% as the Most Accurate Estimate of $1.02 per unit is higher than the Zacks Consensus Estimate of 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sunoco currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Though an earnings beat looks uncertain for Sunoco, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly report:

AcelRx Pharmaceuticals, Inc. has an Earnings ESP of +15.15% and is a Zacks #2 Ranked player. The company is scheduled to release first-quarter results on May 11. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adaptive Biotechnologies Corporation (ADPT - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank of 2. It is scheduled to report first-quarter results on May 12.

Allegiant Travel Company (ALGT - Free Report) has an Earnings ESP of +14.63% and a Zacks Rank #3. The firm is slated to release earnings on May 12.

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