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Sunoco (SUN) Stock Dips 2.6% Despite Reporting Q1 Earnings Beat

Sunoco LP SUN shares have declined 2.6% since it reported better-than-expected first-quarter 2023 earnings on May 2. The downward price movement can be primarily attributed to the company’s rising expenses.

SUN reported first-quarter 2023 earnings of $1.41 per unit, beating the Zacks Consensus Estimate of $1.21. However, the bottom line significantly decreased from the year-ago quarter’s $2.32 per unit.

Total quarterly revenues of $5,362 million missed the Zacks Consensus Estimate of $5,516 million. The top line also declined from $5,402 million a year ago.

Better-than-expected quarterly earnings were primarily driven by higher contributions from the Fuel Distribution and Marketing segment. The positives were partially offset by the higher total cost of sales and operating expenses.

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

Dividend Hike

Sunoco’s board of directors announced a quarterly distribution of 84.20 cents per common unit, indicating an increase from the last paid out 82.55 cents. The distribution will be paid out on May 22, 2023, to common unitholders of record as of May 8, 2023.

Segmental Performance

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

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Fuel Distribution and Marketing: Adjusted EBITDA from the segment increased to $195 million from $174 million in the comparable period of 2022 primarily due to higher motor fuel sales.

All Other: The unit reported an adjusted EBITDA of $26 million compared with $17 million in the prior-year quarter. The year-over-year increase can be attributed to lower costs of sales.

In terms of volumes, the partnership sold 1,930 million gallons of fuel in the reported quarter, up year over year. Motor fuel gross profit per gallon was 12.9 cents compared with the year-ago level of 12.4 cents.

Distributable Cash Flow

Adjusted distributable cash flow was $160 million in the first quarter, reflecting an increase from the year-ago quarter’s $142 million.

Expenses & Capital Expenditure

The total cost of sales and operating expenses in the reported quarter increased to $5,163 million from $5,143 million a year ago.

The partnership incurred a capital expenditure of $37 million in the reported quarter, comprising $29 million in growth capital and $8 million in maintenance capital.

Balance Sheet

As of Mar 31, 2023, Sunoco had cash and cash equivalents of $189 million. At the first-quarter end, it had a net long-term debt of $2,672 million.

Guidance

For 2023, the Zacks Rank #1 (Strong Buy) company revised its adjusted EBITDA guidance upward to $865-$915 million from the previously mentioned $850-$900 million.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Q1 Results of Other Downstream Companies

Phillips 66’s PSX first-quarter 2023 adjusted earnings of $4.21 per share beat the Zacks Consensus Estimate of $3.58. Strong quarterly earnings can be primarily attributed to strong refining margins worldwide.

Phillips 66 is progressing toward its target to return $10-$12 billion in shareholder distributions by the end of 2024. This represents Phillips 66’s strong focus on returning capital to stockholders.

Marathon Petroleum Corporation’s MPC first-quarter 2023 adjusted earnings per share of $6.09 comfortably beat the Zacks Consensus Estimate of $5.74. The company’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment.

In the first quarter, MPC repurchased $3.2 billion of shares and a further $1.2 billion worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $9 billion.

Valero Energy Corporation’s VLO first-quarter 2023 adjusted earnings of $8.27 per share beat the Zacks Consensus Estimate of $7.24 per share. Strong quarterly earnings were driven by increased refinery throughput volumes and a higher refining margin per barrel of throughput.

Valero’s adjusted operating income in the Refining segment amounted to $4,067 million in the first quarter, improving from $1,469 million in the year-ago quarter. VLO’s refining throughput volumes were 2,930 thousand barrels per day (MBbls/d), up from the 2,800 MBbls/d reported in the first quarter of 2022.

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