Why Is Sunoco LP (SUN) Up 2.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Sunoco LP (SUN). Shares have added about 2.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sunoco LP due for a pullback? 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 drivers.
Sunoco's Q2 Earnings Miss Estimates, Revenues Fall Y/Y
Sunoco LP reported second-quarter 2023 earnings of 78 cents per unit, missing the Zacks Consensus Estimate of $1.02. The bottom line declined from the year-ago quarter’s $1.20 per unit.
Total quarterly revenues of $5,745 million missed the Zacks Consensus Estimate of $5,810 million. The top line also declined from $7,815 million a year ago.
Lower contributions from the Fuel Distribution and Marketing segment primarily led to weak quarterly results.
Segmental Performance
Sunoco reports financial results through two reportable segments — Fuel Distribution and Marketing and All Other.
Fuel Distribution and Marketing: Total revenues from the segment decreased significantly to $5,521 million from $7,554 million in the comparable period of 2022, primarily due to lower motor fuel sales.
All Other: The unit reported total revenues of $224 million compared with $261 million in the prior-year quarter. The year-over-year downside can be attributed to lower motor fuel sales. The reported figure came in lower than our estimate of $250.8 million.
In terms of volumes, the partnership sold 2,086 million gallons of fuel in the reported quarter, up year over year from 1,985 million gallons. Motor fuel gross profit per gallon was 12.7 cents compared with the year-ago level of 12.3 cents.
However, the total operating income declined to 141 million in the reported quarter from 173 million in the prior-year quarter, even lower than our estimate of 167 million.
For the quarter ended Jun 30, 2023, net income was $87 million versus $121 million in the second quarter of 2022, also lower than our estimate of $107 million.
Distributable Cash Flow
Adjusted distributable cash flow was $175 million in the second quarter, up from the year-ago quarter’s $159 million.
Expenses & Capital Expenditure
The total cost of sales and operating expenses in the reported quarter declined to $5,604 million from $7,642 million a year ago.
The partnership incurred a capital expenditure of $50 million in the reported quarter, comprising $35 million in growth capital and $15 million in maintenance capital.
Balance Sheet
As of Jun 30, 2023, Sunoco had cash and cash equivalents of $239 million. At the second quarter end, it had a net long-term debt of $2,673 million.
Guidance
For 2023, the company kept its guidance unchanged for adjusted EBITDA within $865-$915 million, as previously reported.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Sunoco LP has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
Sunoco LP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Sunoco LP (SUN) : Free Stock Analysis Report
