Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    +1.76 (+2.16%)
     
  • Gold

    2,254.80
    +42.10 (+1.90%)
     
  • Silver

    25.10
    +0.35 (+1.41%)
     
  • EUR/USD

    1.0790
    -0.0040 (-0.37%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2627
    -0.0011 (-0.09%)
     
  • USD/JPY

    151.3640
    +0.1180 (+0.08%)
     
  • Bitcoin USD

    70,868.80
    +1,688.34 (+2.44%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Sunoco (SUN) Advances Marginally Despite Q4 Earnings Miss

Sunoco LP SUN units gained almost 1% since the fourth-quarter 2021 earnings announcement on Feb 16. Rising consumption of fuels and refining production in the domestic market has driven the demand for wholesale fuel distribution businesses. This likely pushed the partnership’s unit price up.

Sunoco reported fourth-quarter earnings of 95 cents per unit, which missed the Zacks Consensus Estimate of $1.14. However, the bottom line increased from adjusted earnings of 77 cents in the year-ago quarter.

Total quarterly revenues of $4,954 million beat the Zacks Consensus Estimate of $4,951 million. The top line also increased from $2,553 million a year ago.

The lower-than-expected earnings can be attributed to higher costs of sales and operating expenses. The negatives were partially offset by higher motor fuel and non-motor fuel sales.

Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP Price, Consensus and EPS Surprise
Sunoco LP Price, Consensus and EPS Surprise

Sunoco LP price-consensus-eps-surprise-chart | Sunoco LP Quote

Segmental Performance

Sunoco reports financial statements through two reportable segments — Fuel Distribution and Marketing, and All Other.

Fuel Distribution and Marketing: Total gross profit from the segment increased to $291 million from $249 million in the comparable period of 2020 primarily due to higher motor fuel sales.

All Other: The unit reported a gross profit of $48 million versus $33 million in the comparable period of 2020. The year-over-year increase can be attributed to higher non-motor fuel sales.

In terms of volumes, the partnership sold 1.9 billion gallons of fuel in the reported quarter, up 3.1% year over year, owing to the energy demand recovery from the coronavirus pandemic. Motor fuel gross profit per gallon was recorded at 12 cents for the quarter versus the year-ago level of 9.2 cents.

Distribution

For the quarter ended Dec 31, 2021, Sunoco declared a quarterly cash distribution of 82.55 cents per unit or $3.3020 on an annualized basis. Markedly, the distribution was flat on a sequential basis. Trailing 12 months’ cash coverage was 1.56X.

Adjusted distributable cash flow was $143 million in the fourth quarter, reflecting an increase from the year-ago quarter’s $97 million.

Expenses & Capital Expenditure

The total cost of sales and operating expenses for the reported quarter surged to $4,778 million from $2,409 million a year ago.

The partnership incurred a gross capital expenditure of $82 million for the reported quarter, comprising $65 million in growth capital and $17 million in maintenance capital.

Balance Sheet

As of Dec 31, 2021, Sunoco had cash and cash equivalents of $25 million, sequentially down from $88 million. At the fourth-quarter end, it had net long-term debt of $2,668 million, marginally down from $2,672 million at the third-quarter end. It had a long-term debt to capitalization of 76.7%.

Guidance

For 2022, Sunoco projects adjusted EBITDA at $770-$810 million. In 2021, the metric was recorded at $754 million. The partnership expects operating expenses of $490-$500 million,

The partnership expects fuel volumes of 7.7-8.1 billion gallons for the year, indicating a rise from the 2021 level of 7.55 billion gallons. Fuel margins will likely be 10.5-11.5 cents per gallon. The same in 2021 was 11.2 cents per gallon. Notably, the Zack Rank #1 (Strong Buy) partnership expects maintenance and growth capex of $50 and $150 million, respectively, for the year. You can see the complete list of today’s Zacks #1 Rank stocks here.

A Glimpse of Other Players' Q4 Results

Energy companies are likely to have generated huge profits from the demand recovery. Glimpses of such improvements have been witnessed in the fourth quarter. Investors interested in the energy sector might consider the following companies that reported solid fourth-quarter earnings numbers.

Devon Energy Corp. DVN reported fourth-quarter 2021 adjusted earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.21 by 14.9%. At 2021-end, DVN had proved reserves of nearly 1,625 million barrels of oil equivalent, up 14.8% from the 2020-end level of 1,415 million.

Devon is expected to see earnings growth of 67.1% in 2022. In the fourth quarter, Devon repurchased 14 million shares at a total cost of $589 million. The board of directors expanded the company’s share-repurchase authorization by 60% to $1.6 billion, which is equivalent to 5% of Devon’s market capitalization.

Cenovus Energy Inc. CVE reported fourth-quarter 2021 earnings per share of 43 cents, beating the Zacks Consensus Estimate of earnings of 41 cents. CVE reported 2021 year-end proved reserves of 6.1 billion Boe, suggesting a year-over-year increase of 21%.

Cenovus is expected to see earnings growth of 116.1% in 2022. CVE has a strong focus on returning capital to shareholders. This year's commitment to growing shareholders’ returns comprises the plan to buy back up to 146.5 million common shares. In 2021, Cenovus repurchased 17 million common shares, with another 9 million bought back this year.

Valero Energy Corporation VLO reported fourth-quarter 2021 adjusted earnings of $2.47 per share, beating the Zacks Consensus Estimate of $1.79 per share. At the quarter-end, Valero Energy had cash and cash equivalents of $4,122 million.

Valero Energy is expected to see earnings growth of 152.7% in 2022. Through the December-end quarter, the leading independent refiner and marketer of petroleum products returned $401 million to stockholders as dividend payments.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Devon Energy Corporation (DVN) : Free Stock Analysis Report

Valero Energy Corporation (VLO) : Free Stock Analysis Report

Sunoco LP (SUN) : Free Stock Analysis Report

Cenovus Energy Inc (CVE) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Advertisement