Sunoco’s Earnings Grew in Q1: What Caused the Sunny Results?
SXL’s market performance
In this article, we’ll look at Sunoco Logistics Partners’ (SXL) analyst ratings following its 1Q16 earnings results. First, let’s look at the partnership’s market performance and ongoing expansion opportunities.
SXL has returned 10.3% since the beginning of 2016. SXL’s peers NuStar Energy (NS), NGL Energy Partners (NGL), and Rose Rock Midstream (RRMS) have returned 17.4%, 15.8%, and 19.7%, respectively, in 2016. The Alerian MLP ETF (AMLP), which comprises 24 midstream energy MLPs, is up 0.4%.
SXL’s organic projects
SXL recently announced the start of ethane transportation along the Mariner East 1 pipeline. Also, the partnership announced the “start of commercial operations on bayou bridge pipeline” in a press release published on April 21. SXL owns 30% in the project. The partnership is expecting the following projects to begin operating in 2016.
- Permian Longview & Louisiana Extension
- Delaware Basin Extension
- Bakken Pipeline project
SXL’s 2016 capital plans
SXL expects its 2016 planned capex to fall significantly. However, the partnership hasn’t arrived at a definitive number. According to Michael Hennigan, SXL’s CEO, “Our teams are working on project financing for the Bakken project, evaluating the potential sale of some assets, as well as evaluating inbound calls on joint venture opportunities. These items along with our later Mariner East 2 startup date and the deferrals in smaller projects are still expected to significantly lower our capital estimate in 2016.”
Analyst ratings for SXL
At a broader level, 68.8% of analysts rate Sunoco Logistics a “buy” and the remaining 31.2% rate it a “hold.” The consensus target price of $32.3 for SXL implies a 14.3% price return in the next 12 months from its May 5 closing price of $22.7. SXL forms 0.11% of the PowerShares Dividend Achievers Portfolio (PFM).
For more post-earnings coverage on midstream companies, check out Master Limited Partnerships page.
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