Why Did Sunoco Stock Fall After Q1 Earnings?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 06 2025
0mins
Should l Buy SUN?
Source: Benzinga
First Quarter Financial Performance: Sunoco LP reported first-quarter revenues of $5.18 billion, missing expectations, with an EPS of $1.21 also below consensus. However, adjusted distributable cash flow increased to $310 million from $176 million a year ago, and adjusted EBITDA rose to $458 million.
Acquisition Announcement: The company announced its agreement to acquire Parkland Corporation for approximately $9.1 billion, including debt, while also declaring a distribution increase of 1.25% per unit, payable on May 20, 2025.
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Analyst Views on SUN
Wall Street analysts forecast SUN stock price to rise
6 Analyst Rating
6 Buy
0 Hold
0 Sell
Strong Buy
Current: 58.900
Low
57.00
Averages
63.67
High
70.00
Current: 58.900
Low
57.00
Averages
63.67
High
70.00
About SUN
Sunoco LP is an energy infrastructure and fuel distribution master limited partnership operating in over 32 countries and territories in North America, the Greater Caribbean, and Europe. The Company's midstream operations include a network of approximately 14,000 miles of pipeline and over 160 terminals. Its segments include Fuel Distribution, Pipeline Systems and Terminals. The Fuel Distribution segment supplies motor fuel to independently operated dealer stations, distributors, commission agents and other consumers. The Pipeline Systems segment includes the operations of its refined products, crude oil and anhydrous ammonia pipelines, as well as other assets that are operated and managed on an integrated basis with its pipeline systems, including certain terminal and storage assets. Its Terminals segment is composed of facilities that provide storage, handling and other services on a fee basis for refined products, crude oil, specialty chemicals, renewable fuels and other liquids.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Estimate Revisions: In the last three months, EPS estimates have seen no upward revisions and one downward revision, while revenue estimates also experienced no upward revisions and one downward revision, suggesting cautious market sentiment regarding future performance.
- Upgraded Investment Rating: Analysts have upgraded Sunoco LP to a 'Buy' rating, highlighting its attractive 7% dividend yield, which may further drive stock price appreciation.
See More
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- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
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- Dividend History Comparison: Unlike Enterprise Products Partners, Energy Transfer cut its distribution in 2020, and while it now targets annual growth of 3% to 5%, past cuts may have disappointed income-dependent investors.
- Investment Considerations: Despite the attractive high yield, the associated risks and complexities of Energy Transfer may lead conservative dividend investors to prefer Enterprise Products Partners, which offers more stable dividend growth.
See More
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- Security Review Requirement: The German government has mandated the sale of the unit operating a vital military fuel pipeline network as a condition for Sunoco LP's acquisition of TanQuid, indicating heightened vigilance against foreign control of critical infrastructure.
- State Ownership Context: The government currently owns 51% of the TanQuid unit in question and has requested the defense ministry to acquire the remaining shares, reflecting a stringent regulatory stance on foreign acquisitions to ensure national security.
- Transaction Progress: Sunoco's purchase of TanQuid was approved and completed earlier this month, indicating that despite regulatory challenges, the deal is advancing, which may impact the future investment landscape.
- Historical Intervention Reflection: This decision echoes past interventions aimed at blocking foreign control, particularly by Chinese firms, underscoring the German government's ongoing efforts to protect national security and critical infrastructure.
See More
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- Future Investment Plans: The company plans to invest $5.5 billion in capital projects in 2026, which is expected to support a distribution growth of 3% to 5%, demonstrating its commitment to becoming a more reliable income investment.
- Historical Trust Issues: Although the distribution has recovered and surpassed pre-pandemic levels, the cut during the 2020 pandemic still raises concerns among conservative investors, potentially affecting their investment decisions.
- Alternative Competitors: For investors wary of management decisions, alternatives like Enterprise Products Partners and Enbridge offer a more stable dividend history, albeit with slightly lower yields of 6.6% and 5.8%, respectively.
See More
