Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors

Are you keeping a close watch on the energy sector and wondering about the financial stability of key players? Have you considered how recent acquisitions and market dynamics might impact long-term investments? In 2024, Sunoco LP (SUN) reported a record adjusted EBITDA of $1.56 billion, a 62% increase from 2023, and net income of $874 million, up 122% from the previous year, with fuel volumes totaling 8.6 billion gallons. With a targeted distribution growth rate of at least 5% for 2025, is Sunoco LP a robust investment, or are there hidden risks beneath the surface? Keep reading to find out more.

Sunoco LP (SUN) Revenue Analysis

Understanding Sunoco LP (SUN)'s revenue streams is crucial for investors seeking to assess the company's financial health and future prospects. Here's a breakdown of key aspects related to their revenue:

Breakdown of Primary Revenue Sources:

Sunoco LP primarily generates revenue through:

• Fuel Distribution: This segment involves the distribution of motor fuels and other petroleum products. In Q4 2024, the company sold approximately 2.2 billion gallons of fuel.
• Pipeline Systems: This segment focuses on the transportation of fuels through an extensive network of pipelines. In Q4 2024, the segment reported throughput volumes averaging 1.4 million barrels per day.
• Terminals: This segment involves the storage and handling of fuels at various terminals. The segment managed throughput volumes of approximately 590,000 barrels per day in Q4 2024.

Year-over-Year Revenue Growth Rate:

Analyzing the year-over-year revenue growth rate provides insights into the company's performance trends:

• For the twelve months ending December 31, 2024, Sunoco LP's revenue was $22.693 billion, a 1.63% decrease year-over-year.
• Annual revenue for 2024 was $22.693 billion, a 1.63% decline from 2023.
• In 2023, the annual revenue was $23.068 billion, a 10.34% decrease from 2022.
• 2022 saw a significant increase, with annual revenue at $25.729 billion, a 46.22% increase from 2021.

Contribution of Different Business Segments to Overall Revenue:

The contribution of each business segment helps understand where the majority of revenue is generated:

• Fuel Distribution: Contributed 94.13% to total sales.
• Non-Fuel: Contributed 1.3% to total sales.
• Terminal Throughput: Contributed 0.45% to total sales.

Analysis of Any Significant Changes in Revenue Streams:

Significant changes in revenue streams can be attributed to strategic initiatives and market dynamics:

• The acquisition of NuStar Energy L.P. on May 3, 2024, and the divestiture of 204 convenience stores to 7-Eleven, Inc. on April 16, 2024, had notable impacts on revenue.
• In Q4 2024, the Fuel Distribution segment's Adjusted EBITDA was $192 million, with a fuel margin of 10.6 cents per gallon.
• The Pipeline Systems segment's Adjusted EBITDA was $188 million, driven by increased volumes across major pipeline systems.
• The Terminals segment's Adjusted EBITDA was $59 million, supported by acquisitions of NuStar and Zenith European terminals.

Here is a table summarizing Sunoco LP's Revenue from 2021-2024:

For additional insights, you might find this resource helpful: Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors

Sunoco LP (SUN) Profitability Metrics

Assessing Sunoco LP (SUN)'s financial health involves a detailed look into its profitability metrics. These metrics provide insights into how efficiently the company generates profits from its revenue and assets. Examining gross profit, operating profit, and net profit margins, alongside their trends, offers a comprehensive view of Sunoco LP (SUN)’s financial performance.

Here's what to consider when evaluating Sunoco LP (SUN)’s profitability:

• Gross Profit Margin: This ratio indicates the percentage of revenue remaining after subtracting the cost of goods sold (COGS). A higher gross profit margin suggests that Sunoco LP (SUN) is efficient in managing its production costs.
• Operating Profit Margin: This ratio reveals the percentage of revenue remaining after deducting both COGS and operating expenses. It reflects Sunoco LP (SUN)’s efficiency in managing its core business operations.
• Net Profit Margin: This ratio shows the percentage of revenue that translates into net profit after all expenses, including interest and taxes, are accounted for. It represents the overall profitability of Sunoco LP (SUN).

Analyzing these profitability ratios over time helps identify trends and potential areas of concern or improvement. Comparing Sunoco LP (SUN)’s profitability ratios with industry averages provides a benchmark for assessing its competitive position and performance. Let's explore Sunoco LP (SUN)'s profitability in detail.

For the fiscal year 2024, Sunoco LP (SUN) reported a gross profit of $2.984 billion. This indicates the revenue remaining after deducting the cost of goods sold, reflecting the company's efficiency in managing production costs. The operating income for the same period was $711 million. This figure represents the profit earned from the company's core business operations before accounting for interest and taxes.

The net income attributable to partners was $368 million for fiscal year 2024. This represents the portion of profit available to the company's partners after all expenses, including interest and taxes, have been paid. These values provide a baseline for assessing Sunoco LP (SUN)’s ability to generate profit from its operations.

Here is a table summarizing Sunoco LP (SUN)'s key profitability figures for fiscal year 2024:

Understanding operational efficiency involves examining how well Sunoco LP (SUN) manages its costs and maintains its gross margin. Effective cost management and stable or increasing gross margins are indicators of strong operational efficiency. Monitoring these elements helps investors gauge Sunoco LP (SUN)’s ability to sustain and improve its profitability.

Learn more about Sunoco LP (SUN)’s values at: Mission Statement, Vision, & Core Values of Sunoco LP (SUN).

Sunoco LP (SUN) Debt vs. Equity Structure

Understanding how Sunoco LP (SUN) manages its debt and equity is crucial for investors assessing its financial stability and growth potential. This involves looking at the levels of debt Sunoco LP carries, how it compares to its equity, and how these figures stack up against industry norms.

As of the fiscal year 2024, Sunoco LP's debt profile includes both short-term and long-term obligations. Examining the most recent financial statements will provide the exact figures, but generally, the balance between these debts indicates how well Sunoco LP is managing its immediate and future financial commitments. For instance, a high level of short-term debt might suggest upcoming refinancing needs or potential liquidity concerns, while long-term debt is often used to fund significant capital projects and expansions.

The debt-to-equity ratio is a key metric for evaluating Sunoco LP’s financial leverage. This ratio illustrates the proportion of debt and equity used to finance the company’s assets. To assess whether Sunoco LP's debt-to-equity ratio is healthy, it should be compared against the average ratios within the oil and gas pipeline and transportation industry. A significantly higher ratio than its peers could indicate higher financial risk.

Recent activities, such as new debt issuances, changes in credit ratings, or any refinancing efforts, provide insights into Sunoco LP’s strategic financial management. Here's what to consider:

• Debt Issuances: New debt can fund growth but also increase leverage.
• Credit Ratings: Upgrades or downgrades reflect investor confidence in Sunoco LP's ability to meet its obligations.
• Refinancing: This can lower interest rates and extend debt maturity, improving cash flow.

Sunoco LP strategically uses both debt and equity to fund its operations and growth. Debt financing can provide capital without diluting ownership, but it also introduces fixed interest payments and the risk of default. Equity, on the other hand, strengthens the balance sheet but can dilute existing shareholders’ ownership. The optimal balance ensures financial flexibility while supporting long-term strategic goals.

For additional insights into Sunoco LP's financial health, consider exploring: Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors

Sunoco LP (SUN) Liquidity and Solvency

Analyzing Sunoco LP's financial health requires a close look at its liquidity and solvency, which reveals its ability to meet short-term obligations and long-term financial stability. Let's delve into key financial metrics to assess Sunoco LP (SUN)'s liquidity position.

Liquidity Ratios:

The current and quick ratios are essential indicators of a company's ability to cover its short-term liabilities with its short-term assets. For Sunoco LP (SUN), these ratios provide a snapshot of its immediate financial health. As of the fiscal year 2024, it's crucial to examine these figures in the context of Sunoco LP's industry and historical performance.

• Current Ratio: This ratio measures Sunoco LP’s ability to pay off its current liabilities with its current assets. A ratio of greater than 1 indicates that the company has more current assets than current liabilities.
• Quick Ratio: Similar to the current ratio, the quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.

Working Capital Trends:

Monitoring working capital trends helps to understand Sunoco LP's operational efficiency and short-term financial management. Working capital, calculated as the difference between current assets and current liabilities, indicates the resources available to cover immediate obligations and operational needs. Analyzing the trend of working capital over several periods can reveal whether Sunoco LP is effectively managing its short-term finances. Declining working capital could signal potential liquidity issues, while increasing working capital might indicate improved efficiency or excessive accumulation of liquid assets.

Cash Flow Statement Overview:

The cash flow statement provides critical insights into Sunoco LP's liquidity by tracking the movement of cash both into and out of the company. It is divided into three main sections:

• Operating Activities: This section shows the cash generated from Sunoco LP’s core business operations. Positive cash flow from operations indicates that the company is generating enough cash to maintain and grow its business.
• Investing Activities: This includes cash flow related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E). These activities can provide insight into the company's capital expenditures and strategic investments.
• Financing Activities: This section involves cash flow from debt, equity, and dividends. Analyzing financing activities can reveal how Sunoco LP is funding its operations and returning value to shareholders.

Potential Liquidity Concerns or Strengths:

Based on the analysis of liquidity ratios, working capital trends and cash flow statements, it’s important to highlight any potential liquidity concerns or strengths for Sunoco LP (SUN). Consistent positive cash flow from operations is a strength, indicating the company’s ability to generate cash from its core business activities. However, significant debt obligations or large capital expenditure plans could pose liquidity concerns.

Here is a sample table illustrating key liquidity metrics for Sunoco LP (SUN) as of fiscal year 2024:

These metrics should be continuously monitored to provide an up-to-date view of Sunoco LP's financial health and stability.

Sunoco LP (SUN) Valuation Analysis

Determining whether Sunoco LP (SUN) is overvalued or undervalued requires analyzing several key financial metrics and market indicators. Here's a breakdown to provide a comprehensive view:

Price-to-earnings (P/E) Ratio:

• The trailing P/E ratio as of December 31, 2024, is 9.54.
• The forward P/E ratio is 7.46.
• Estimates for the future are: 11.13 for 2024, 5.67 for 2025, 5.25 for 2026 and 4.88 for 2027.

Price-to-book (P/B) Ratio:

• The price-to-book ratio is 1.92 as of December 31, 2024.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio:

• Sunoco's latest twelve months EV/EBITDA is 10.6x.
• The EV/EBITDA for fiscal years ending December 2020 to 2024 averaged 9.0x.
• The median EV/EBITDA is 9.5x from fiscal years ending December 2020 to 2024.
• In December 2024, Sunoco's EV/EBITDA peaked at 10.6x.
• The EV/EBITDA hit a 5-year low in December 2021 at 7.5x.

Here's a table summarizing the EV/EBITDA ratio over the last five years:

Stock Price Trends:

• As of April 17, 2025, Sunoco LP's stock price is around $57.22.
• Over the last 12 months, the stock price has increased by approximately 5.24%.
• The 52-week range is $48.00 - $59.67.

Dividend Yield and Payout Ratios:

• The forward annual dividend rate is $3.55.
• The forward annual dividend yield is approximately 6.20%.
• Sunoco's dividend payout ratio is 57.81%.

Analyst Consensus:

• The average analyst rating for Sunoco LP stock is 'Strong Buy'.
• The average price target from analysts is $63.83, suggesting an increase of 11.65% from the current stock price.
• Price targets range from a low of $61 to a high of $68.

Based on these data points, Sunoco LP appears to be reasonably valued by the market. The strong buy consensus from analysts, combined with a healthy dividend yield and manageable payout ratio, suggests potential upside. However, factors such as market conditions and company-specific developments could influence future stock performance.

Read more about Sunoco LP's financial health: Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors

Sunoco LP (SUN) Risk Factors

Sunoco LP (SUN) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and financial challenges detailed in their reports and filings.

Industry Competition: The energy sector is intensely competitive. Sunoco faces competition from other large fuel distributors, convenience stores, and even alternative energy sources. This competition can pressure profit margins and market share. If Sunoco fails to adapt to changing market dynamics, its financial performance could suffer.

Regulatory Changes: The business is subject to extensive federal, state, and local environmental and safety regulations. Changes in these regulations can lead to increased compliance costs, delays, or even the cancellation of projects. For example, stricter emissions standards or pipeline safety requirements could necessitate significant investments in infrastructure upgrades.

Market Conditions: Fluctuations in commodity prices, particularly crude oil and refined products, directly affect Sunoco's profitability. Economic downturns can reduce demand for fuel, impacting sales volumes. Additionally, shifts in consumer behavior, such as increased adoption of electric vehicles, pose a long-term threat to traditional fuel distribution models.

Operational Risks: Disruptions to the supply chain, such as pipeline outages or refinery shutdowns, can significantly impact Sunoco's ability to meet customer demand. The company also faces risks related to the operation of its terminals and transportation infrastructure, including potential spills, leaks, or other environmental incidents.

Financial Risks: Sunoco's financial performance is sensitive to changes in interest rates, as the company relies on debt financing. The availability and cost of capital can impact its ability to fund growth projects and refinance existing debt. Additionally, Sunoco faces risks related to its hedging activities, which are designed to mitigate commodity price volatility.

Sunoco's 2024 fiscal year data highlight some key financial figures:

• Revenues: Total revenues reached $25.7 billion.
• Net Income: The company reported a net income of $480 million.
• Capital Expenditures: Capital expenditures amounted to $250 million, primarily for growth projects and maintenance.

Mitigation strategies or plans (if available): Sunoco employs several strategies to mitigate these risks:

• Diversifying its business operations across different regions and product lines.
• Investing in technology and infrastructure to improve efficiency and safety.
• Implementing robust risk management programs to identify and address potential threats.
• Maintaining strong relationships with suppliers and customers to ensure supply chain resilience.
• Engaging with policymakers and regulators to advocate for policies that support the company's interests.

Here's a hypothetical table summarizing some key risk areas and potential mitigation strategies:

To delve deeper into Sunoco LP (SUN) financial health, consider reading: Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors

Sunoco LP (SUN) Growth Opportunities

Sunoco LP (SUN) is focused on several key strategies to drive future growth. These include optimizing their existing operations, expanding their footprint through strategic acquisitions, and enhancing their service offerings to meet evolving customer needs. These initiatives are designed to strengthen Sunoco's market position and deliver sustainable value to its unitholders.

Here's a detailed look at the factors driving Sunoco LP's potential growth:

• Product Innovations: While specific details on product innovations were not found in the provided search results, continuous improvement in service offerings and operational efficiency are implied as ongoing efforts to maintain competitiveness.
• Market Expansions: Sunoco has been actively expanding its market presence through acquisitions. For example, in 2024, Sunoco acquired NuStar Energy in a deal valued at $7.3 billion. This acquisition is expected to significantly increase Sunoco's scale and diversification.
• Acquisitions: Acquisitions have been a significant part of Sunoco's growth strategy. The NuStar Energy acquisition, which closed in May 2024, added substantial pipeline and storage assets, enhancing Sunoco's infrastructure network.

Future revenue growth projections and earnings estimates for Sunoco LP are influenced by several factors, including market conditions, operational efficiencies, and strategic initiatives. While specific figures for 2024 weren't available, the company's performance is closely tied to the demand for motor fuels and the effective management of its extensive distribution network.

Strategic initiatives and partnerships are crucial for Sunoco's growth. The acquisition of NuStar Energy is a prime example of a strategic move that enhances Sunoco's capabilities and market reach. Additionally, Sunoco focuses on optimizing its supply chain and logistics to improve efficiency and reduce costs, contributing to overall growth and profitability.

Sunoco's competitive advantages include its extensive network of pipelines and terminals, its strong brand recognition, and its established relationships with retailers and suppliers. These factors enable Sunoco to maintain a strong market position and effectively compete in the dynamic energy distribution industry.

Here's a summary of Sunoco LP's financial performance and growth estimates:

To gain a broader understanding of Sunoco LP's financial performance, see Breaking Down Sunoco LP (SUN) Financial Health: Key Insights for Investors.