Sunoco LP Common Units representing limited partner interests (SUN) Company Bio
Sunoco LP engages in the wholesale distribution and retail sale of motor fuels primarily in Texas, New Mexico, Oklahoma, Louisiana, Kansas, Maryland, Virginia, Tennessee, Georgia, and Hawaii. It operates through two segments, Wholesale and Retail. The company was founded in 2014 and is based in Houston, Texas.
SUN Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Sunoco LP with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Sunoco LP ranked in the 86th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 866% on a DCF basis. The most interesting components of our discounted cash flow analysis for Sunoco LP ended up being:
42% of the company's capital comes from equity, which is greater than only 15.17% of stocks in our cash flow based forecasting set.
Sunoco LP's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than only 0% of US stocks with positive free cash flow.
The weighted average cost of capital for the company is 8. This value is greater than merely 21.61% stocks in the Energy sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Energy that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as SUN, try ENBL, TGP, VET, CELP, and SPNX.
Moody's Investors Service ("Moody's") changed Sunoco LP's (SUN) outlook to positive from stable while affirming its Ba3 Corporate Family Rating (CFR), Ba3-PD Probability of Default Rating (PDR) and its B1 senior unsecured notes rating. SUN's Speculative Grade Liquidity (SGL) rating was upgraded to SGL-2 from SGL-3. "Higher margins are offsetting somewhat lower wholesale motor fuels distribution volumes, enabling SUN to generate modest earnings growth and positive free cash flow," commented Andrew Brooks, Moody's Vice President.