Sunoco, Inc (SUN) is scheduled to report its fiscal third quarter financial results on Thursday, November 5, 2009. In the previous quarter, the company disappointed the investors by reporting significantly lower net income compared to the consensus earnings estimates. However, in the last two years, the company's Q3 revenues trended up over Q2 revenues.
Analysts' estimates for the quarter ending September 2009 (Q3) range from a low of $-0.32 to a high of $0.15, with a consensus of $-0.103.
For the fiscal quarter ending September 2009, the consensus EPS has increased over the past week from -$0.106 to -$0.103 (2.83%) and decreased over the past month from $0.109 to -$0.103 (-194.50%). Of the 17 analysts making quarterly forecasts, 1 raised and 8 lowered their forecast.
More number of analysts revised their estimates downwards as they had overestimated the positive impact of the favorable operating conditions. Rising crude costs significantly should have affected its margin realizations during the third quarter. Refining production in the third quarter was impacted by a planned turnaround at the company's Toledo refinery, which commenced in August and continued through mid September. In addition, the company took one month maintenance outage at a fluid cracking unit in its Philadelphia refinery for repairs that should have improved the units' operating performance.
The company's cost management and retail portfolio management program, and non-refining operations remain bright spots in the third quarter. The company remains on target to reduce cost by more than $300 million on an annualized basis by the end of the year. Its focus on capital discipline should allow it to manage through this refining down cycle while maintaining its financial flexibility and liquidity through 2009.
In mid June, Sunoco closed the acquisition of Northeast Biofuels, $100 million gallons-per-year ethanol facility in New York for $8.5 million. The plant will require approximately $15 million to $20 million in additional capital and the company anticipates start up in the first half of 2010. This is its first step into the Biofuels area and it can leverage its manufacturing and logistics experience to make it a success. For the fiscal year ending September 2009, the consensus EPS forecast has decreased over the past week from $0.378 to $0.297 (-21.43%) and decreased over the past month from $0.629 to $0.297 (-52.78%). Of the 14 analysts making yearly forecasts, 5 raised and 7 lowered their forecast.
The company's stock closed Wednesday at $30.68, compared to the 52 week range of $21.45 and $47.4. The stock seems to be trading at appropriate levels. May be we can get better color on the company's performance after the fourth quarter.
