SUN Stock Risk & Deep Value Analysis
Sunoco LP
DVR Score
out of 10
What You Need to Know About SUN Stock
We analyzed Sunoco LP using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran SUN through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
SUN Risk Analysis & Red Flags
What Could Go Wrong
The biggest risk is the accelerating decline in demand for fossil fuels due to EV adoption, which directly erodes Sunoco's core business without a clear, high-growth pivot strategy. This secular headwind could lead to sustained revenue declines or margin compression, making high future earnings estimates unattainable and potentially forcing a re-evaluation of its MLP structure and distribution policy.
Risk Matrix
Overall
Moderate
Financial
Medium
Market
High
Competitive
Medium
Execution
Medium
Regulatory
Low
Red Flags
- ⚠
Significant EPS miss in the most recent reported quarter ($0.09 vs. $1.64 estimate).
- ⚠
High Debt/Equity ratio (164.3%), common for MLPs but limits financial flexibility for growth investments.
- ⚠
Thin net profit margins (1.24-2.01%) making the business sensitive to operational inefficiencies or pricing pressures.
- ⚠
No identified disruptive innovation or high-growth market expansion strategy for 10x potential.
Upcoming Risk Events
- 📅
Faster-than-expected EV adoption impacting fuel demand
- 📅
Significant volatility in crude oil prices affecting margins and consumer demand
- 📅
Failure to meet consensus FY2026 EPS of $7.96
When to Reconsider
- 🚪
Exit if quarterly fuel volumes show sustained decline for two consecutive quarters.
- 🚪
Sell if annual distribution growth turns negative or if the distribution coverage ratio falls below 1.0x.
- 🚪
Consider exit if net profit margins consistently fall below 1% for two consecutive quarters.
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Investment Thesis
Sunoco LP is a stable, high-yield MLP offering steady income and potential for modest capital appreciation if it can consistently meet its ambitious FY2026 earnings estimates and continue to execute on operational efficiency and accretive acquisitions. It is not an investment for 10x growth but for portfolio diversification into a mature, essential services sector with a strong income component.
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SUN Price Targets & Strategy
12-Month Target
$79.60
Bull Case
$95.52
Bear Case
$63.68
Valuation Basis
Based on 10x forward P/E applied to $7.96 est. FY26 EPS.
Entry Strategy
Dollar-cost average between $60-$65, looking for consolidation above recent support levels.
Exit Strategy
Consider profit-taking at $75-$80. Implement a stop loss if the stock closes below $58.00 (prior support zone).
Portfolio Allocation
2-4% for conservative to moderate income-focused portfolios; not suitable for aggressive growth portfolios targeting 10x returns.
Price Targets & Strategy
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Is SUN Financially Healthy?
Valuation
P/E Ratio
24.50
Forward P/E
10.46
EV/EBITDA
9.86
PEG Ratio
0.87
Price/Book
1.80
Price/Sales
0.33
Profitability
Gross Margin
11.08%
Operating Margin
3.59%
Net Margin
2.09%
Return on Equity
10.37%
Revenue Growth
11.05%
EPS
$3.84
Balance Sheet
Current Ratio
1.38
Quick Ratio
0.78
Debt/Equity
1.67
Other
Beta (Volatility)
0.40
Dividend Yield
5.77%
Does SUN Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Eroding
Moat Sources
2 Identified
Sunoco's moat stems from its vast physical distribution network and established customer relationships. However, this moat is eroding due to the secular decline in demand for internal combustion engine fuels, driven by the shift to electric vehicles. Its assets are largely tied to a declining industry.
Moat Erosion Risks
- •Accelerated adoption of electric vehicles reducing demand for traditional fuels.
- •Increased competition from alternative fuel sources or new distribution models.
- •Regulatory changes favoring non-fossil fuel energy sources.
SUN Competitive Moat Analysis
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SUN Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral (Limited discussion focusing on dividend yield and stability, not growth)
Institutional Sentiment
Neutral (Institutional ownership, particularly by MLP ETFs like ALPS Advisors, indicates a focus on income rather than growth potential. No recent analyst upgrades/downgrades specified.)
Insider Activity (Form 4)
No Form 4 filings reported in last 90 days (Jan 19-Apr 19, 2026).
Options Flow
Normal options activity (No unusual activity or significant skew in put/call ratios reported in the provided research brief.)
Earnings Intelligence
Next Earnings
2026-05-05
Surprise Probability
Medium (Recent EPS miss creates uncertainty despite high consensus estimates for Q1 2026 and FY 2026.)
Historical Earnings Pattern
Historically, as an MLP, SUN's stock price reaction to earnings often depends on distribution coverage, guidance for future distributions, and stability of operations rather than solely on growth metrics. Recent significant EPS miss suggests potential for negative reaction if estimates aren't met.
Key Metrics to Watch
Competitive Position
Top Competitor
CrossAmerica Partners LP (CAPL)
Market Share Trend
Stable (No explicit data for gaining or losing share, but operates in a mature market with consolidation. Focus is on maintaining existing relationships and opportunistic acquisitions.)
Valuation vs Peers
Trading at a P/E multiple that may appear higher than some traditional energy MLPs on TTM basis due to low recent EPS, but for an income vehicle, often compared on yield or EV/EBITDA. Consensus FY26 EPS suggests a more reasonable forward P/E, potentially trading near peer averages if those targets are met.
Competitive Advantages
- •Extensive fuel distribution network across 40+ US states
- •Strong relationships with convenience store operators and independent dealers
- •Scale and operational efficiency in a mature industry
Market Intelligence
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What Could Drive SUN Stock Higher?
Near-Term (0-6 months)
- •Q1 2026 Earnings Release on 2026-05-05
- •Updates on operational efficiency initiatives
Medium-Term (6-18 months)
- •Accretive bolt-on acquisitions in core fuel distribution or adjacent convenience store segments
- •Potential debt refinancing to optimize capital structure
Long-Term (18+ months)
- •Continued market consolidation benefiting scale and pricing power for remaining distributors
- •Strategic diversification into non-fuel revenue streams (e.g., EV charging, renewables infrastructure) - currently not a stated focus
Catalysts & Growth Drivers
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What's the Bull Case for SUN?
- ✓
Consistency in meeting or exceeding distribution coverage ratios.
- ✓
Progress in debt reduction or maintaining target leverage levels.
- ✓
Any strategic announcements regarding diversification into new, higher-growth energy segments.
Bull Case Analysis
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How Sunoco LP Makes Money
Sunoco LP primarily makes money by distributing motor fuels (gasoline and diesel) to a network of approximately 10,000 convenience stores, independent dealers, and commercial customers across more than 40 U.S. states. The company acts as a wholesale supplier, buying fuel in bulk and transporting it to retail locations, earning a margin on each gallon sold. Its business model relies on high volume and efficient logistics rather than high per-unit margins.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Sunoco LP (SUN)?
As of April 19, 2026, Sunoco LP has a DVR Score of 0.5 out of 10, placing it in the "Distressed" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Sunoco LP?
Sunoco LP's market capitalization is approximately $12.9B..
What is the risk level for SUN stock?
Our analysis rates Sunoco LP's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of SUN?
Sunoco LP currently has a price-to-earnings (P/E) ratio of 24.5. This is in line with broader market averages.
Does Sunoco LP pay a dividend?
Yes, Sunoco LP pays a dividend with a current yield of approximately 5.77%.
Is Sunoco LP's revenue growing?
Sunoco LP has reported revenue growth of 11.1%. The company is showing strong top-line momentum.
Is SUN stock profitable?
Sunoco LP has a profit margin of 2.1%. The company is profitable but margins are modest.
How often is the SUN DVR analysis updated?
Our AI-powered analysis of Sunoco LP is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 19, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for SUN (Sunoco LP) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.