Sunoco LP (NYSE: SUN)

Sector: Energy Industry: Oil & Gas Refining & Marketing CIK: 0001552275
Market Cap 5.94 Bn
P/B 7.63
P/E 11.81
P/S 0.45
ROIC (Qtr) 6.88
Div Yield % 8.37
Rev 1y % (Qtr) 4.89
Total Debt (Qtr) 10.07 Bn
Debt/Equity (Qtr) 2.48
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About

Sunoco LP, a Delaware master limited partnership and commonly recognized by the stock symbol SUN, operates primarily in the motor fuel distribution and marketing industry in the United States. The company generates revenue through the distribution of motor fuels and other petroleum products, with the Fuel Distribution and Marketing segment accounting for the majority of its revenue. Sunoco LP is one of the largest independent motor fuel distributors in the U.S., supplying motor fuel to over 5,500 company and third-party operated locations in the...

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Investment thesis

Bull case

  • Healthy cash reserves of 3.24B provide 95.26x coverage of short-term debt 34M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 923M provides strong 48.58x coverage of stock compensation 19M, indicating sustainable incentive practices.
  • Strong operating cash flow of 923M provides 4.81x coverage of SG&A expenses 192M, showing efficient operational cost management.
  • Robust tangible asset base of 15.84B provides 4.01x coverage of working capital 3.95B, indicating strong operational backing.
  • Tangible assets of 15.84B provide robust 30.35x coverage of other current liabilities 522M, indicating strong asset backing.

Bear case

  • Operating cash flow of 923M barely covers its investment activities of (726M), with a coverage ratio of -1.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 923M provides thin coverage of dividend payments of (648M) with a -1.42 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 3.24B provide limited coverage of acquisition spending of (203M), which is -15.96x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 1.08B show weak coverage of depreciation charges of 621M, with a 1.74 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 621M relative to operating cash flow of 923M, which is 0.67x suggests significant maintenance capital requirements affecting free cash flow.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Oil & Gas Refining & Marketing
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MPC Marathon Petroleum Corp 142.92 Bn 53.05 1.86 34.20 Bn
2 VLO Valero Energy Corp/Tx 79.27 Bn 8.41 0.46 10.58 Bn
3 PSX Phillips 66 70.22 Bn 27.51 0.54 21.76 Bn
4 SUN Sunoco LP 5.94 Bn 11.81 0.45 10.07 Bn
5 DINO HF Sinclair Corp 5.65 Bn 289.25 1.17 3.16 Bn
6 PBF PBF Energy Inc. 3.87 Bn -24.43 0.13 2.90 Bn
7 DK Delek US Holdings, Inc. 2.42 Bn 7.69 0.13 3.59 Bn
8 CVI Cvr Energy Inc 2.28 Bn 13.73 0.31 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.53 0.76
EV to Cash from Ops. EV/CFO 18.13 8.58
EV to Debt EV to Debt 0.94 2.22
EV to EBIT EV/EBIT 13.56 10.87
EV to EBITDA EV/EBITDA 10.54 9.19
EV to Free Cash Flow [EV/FCF] EV/FCF 21.85 10.02
EV to Market Cap EV to Market Cap 1.59 1.76
EV to Revenue EV/Rev 0.72 0.77
Price to Book Value [P/B] P/B 7.63 6.86
Price to Earnings [P/E] P/E 11.81 34.12
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.87 -0.72
Dividend Payout Ratio % Div Payout % (Qtr) 127.90 28.49
Dividend per Basic Share Div per Share (Qtr) 3.57 1.75
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 121.89 -37.85
Interest Coverage Int. cover (Qtr) 2.20 1.50
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -85.46 -33.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 2,692.24 150.03
Dividend Growth (1y) % Div 1y % (Qtr) 37.64 1.78
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 19.74 -40.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 108.15 451.72
EBIT Growth (1y) % EBIT 1y % (Qtr) -3.99 -35.27
EBT Growth (1y) % EBT 1y % (Qtr) -26.03 -53.20
EPS Growth (1y) % EPS 1y % (Qtr) -36.73 -26.82
FCF Growth (1y) % FCF 1y % (Qtr) 21.95 12.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 65.71 31.60
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.23 2.36
Cash Payout Ratio Cash Payout (Qtr) 0.45 0.42
Cash Ratio Cash Ratio (Qtr) 1.73 0.39
Current Ratio Curr Ratio (Qtr) 3.11 1.41
Debt to Equity Ratio Debt/Equity (Qtr) 2.48 10.15
Interest Cover Ratio Int Coverage (Qtr) 2.20 1.50
Times Interest Earned Times Interest Earned (Qtr) 2.20 1.50
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.80 6.34
EBIT Margin % EBIT Margin % (Qtr) 4.95 1.61
EBT Margin % EBT Margin % (Qtr) 2.70 -2.36
Gross Margin % Gross Margin % (Qtr) 8.20 12.04
Net Profit Margin % Net Margin % (Qtr) 2.60 -3.21