SUN
SUN
Accumulate 2026-04-04
Model
DDM
Price at Report
$64.74
Base IV
$89.07
Bear IV
$74.65
Bull IV
$107.87
Entry Zone: 55-60 · Sell Above: 74
Bore Family Office
Valuation Report — Sunoco LP (SUN) • April 4, 2026
3-Stage DDM (Ke) • Discount Rate: 6.81% • Current Price: $64.74
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Sunoco LP is a master limited partnership focused on wholesale motor-fuel distribution, refined-product transportation, and storage/terminalling. The partnership supplies convenience stores, independent dealers, commercial customers, and distributors across more than 40 U.S. states at roughly 10,000 sites, and its general partner sits within the Energy Transfer complex.
The key change in the story is scale and mix. Sunoco historically was primarily a fuel distributor with thin margins but durable cash generation; the NuStar acquisition materially expanded its higher-quality logistics footprint across pipelines, terminals, and ammonia/refined-products infrastructure. That matters because the market should pay a higher multiple for steadier fee-based logistics cash flows than for pure wholesale fuel margins alone.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Fuel Distribution | $25,201M | 86% | +11.0% | 2.0% | Core wholesale motor-fuels business; largest revenue driver, lowest margin |
| Pipeline Systems | $1,750M | 6% | +15.0% | 21.0% | NuStar-derived fee-based transportation assets |
| Terminals & Storage | $1,460M | 5% | +14.0% | 24.0% | Storage and terminalling increase cash-flow stability |
| Other / Corporate | $900M | 3% | +5.0% | 8.0% | Smaller support and ancillary operations |
| Blended Growth Rate | — | 100% | +11.2% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 3.5% | <8% weak |
| FCF Margin | 2.4% | <5% weak |
| Debt / EBITDA | 9.1x | >5x elevated |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $17,596 | $25,729 | $23,068 | $22,693 | $25,201 |
| Rev YoY Growth | — | +46.2% | -10.3% | -1.6% | +11.1% |
| Gross Margin | 7.7% | 5.4% | 5.9% | 9.2% | 11.1% |
| EBITDA ($M) | $926 | $871 | $822 | $1,159 | $1,623 |
| EBITDA Margin | 5.3% | 3.4% | 3.6% | 5.1% | 6.4% |
| Operating Income ($M) | $749 | $678 | $635 | $791 | $935 |
| Operating Margin | 4.3% | 2.6% | 2.8% | 3.5% | 3.7% |
| Net Income ($M) | $524 | $475 | $394 | $866 | $1,029 |
| Net Margin | 3.0% | 1.8% | 1.7% | 3.8% | 4.1% |
| EPS (diluted) | $5.28 | $4.68 | $3.65 | $6.00 | $2.28 |
| Free Cash Flow ($M) | $369 | $375 | $385 | $205 | $615 |
| Annual DPS | $3.302 | $3.302 | $3.368 | $3.513 | $3.658 |
| Total Debt ($M) | $4,376 | $4,120 | $4,113 | $7,999 | $14,855 |
📈 DDM Scenarios
$75
🔴 Bear
$89
📊 Base
$108
🚀 Bull
$64.74
Current Price
$67
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 1.5% | 1.0% | 2.0% | 6.81% | $75 | ▲15.3% |
| 📊 Base | 3.0% | 2.0% | 2.5% | 6.81% | $89 | ▲37.6% |
| 🚀 Bull | 4.5% | 3.0% | 3.0% | 6.81% | $108 | ▲66.6% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 1.5% | Stage 2: 1.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.786 | $3.545 | $3.54 |
| Year 2 | Stage 1 | $3.843 | $3.368 | $6.91 |
| Year 3 | Stage 1 | $3.900 | $3.201 | $10.11 |
| Year 4 | Stage 1 | $3.959 | $3.042 | $13.16 |
| Year 5 | Stage 1 | $4.018 | $2.891 | $16.05 |
| Year 6 | Stage 2 | $4.058 | $2.733 | $18.78 |
| Year 7 | Stage 2 | $4.099 | $2.585 | $21.36 |
| Year 8 | Stage 2 | $4.140 | $2.444 | $23.81 |
| Year 9 | Stage 2 | $4.181 | $2.311 | $26.12 |
| Year 10 | Stage 2 | $4.223 | $2.185 | $28.30 |
| Terminal | — | TV=$89.56 | PV(TV)=$46.34 (62% of IV) | $74.65 |
| Intrinsic Value | — | — | PV(Divs) $28.30 + PV(TV) $46.34 | $74.65 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.81%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $89.56. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $46.34). Intrinsic value = PV of all dividends ($28.30) + PV of terminal value ($46.34) = $74.65 per share.
Base Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.842 | $3.597 | $3.60 |
| Year 2 | Stage 1 | $3.957 | $3.469 | $7.07 |
| Year 3 | Stage 1 | $4.076 | $3.345 | $10.41 |
| Year 4 | Stage 1 | $4.198 | $3.226 | $13.64 |
| Year 5 | Stage 1 | $4.324 | $3.111 | $16.75 |
| Year 6 | Stage 2 | $4.411 | $2.970 | $19.72 |
| Year 7 | Stage 2 | $4.499 | $2.837 | $22.55 |
| Year 8 | Stage 2 | $4.589 | $2.709 | $25.26 |
| Year 9 | Stage 2 | $4.681 | $2.587 | $27.85 |
| Year 10 | Stage 2 | $4.774 | $2.470 | $30.32 |
| Terminal | — | TV=$113.54 | PV(TV)=$58.75 (66% of IV) | $89.07 |
| Intrinsic Value | — | — | PV(Divs) $30.32 + PV(TV) $58.75 | $89.07 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.81%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $113.54. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $58.75). Intrinsic value = PV of all dividends ($30.32) + PV of terminal value ($58.75) = $89.07 per share.
Bull Scenario
Stage 1: 4.5% | Stage 2: 3.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.898 | $3.649 | $3.65 |
| Year 2 | Stage 1 | $4.073 | $3.570 | $7.22 |
| Year 3 | Stage 1 | $4.257 | $3.493 | $10.71 |
| Year 4 | Stage 1 | $4.448 | $3.418 | $14.13 |
| Year 5 | Stage 1 | $4.648 | $3.344 | $17.47 |
| Year 6 | Stage 2 | $4.788 | $3.224 | $20.70 |
| Year 7 | Stage 2 | $4.931 | $3.109 | $23.81 |
| Year 8 | Stage 2 | $5.079 | $2.999 | $26.81 |
| Year 9 | Stage 2 | $5.232 | $2.892 | $29.70 |
| Year 10 | Stage 2 | $5.389 | $2.788 | $32.49 |
| Terminal | — | TV=$145.68 | PV(TV)=$75.38 (70% of IV) | $107.87 |
| Intrinsic Value | — | — | PV(Divs) $32.49 + PV(TV) $75.38 | $107.87 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.81%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $145.68. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $75.38). Intrinsic value = PV of all dividends ($32.49) + PV of terminal value ($75.38) = $107.87 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.8% | $125 | $142 | $167 | $204 | $271 |
| 5.3% | $109 | $121 | $137 | $160 | $196 |
| 5.8% | $96 | $105 | $116 | $132 | $154 |
| 6.3% | $86 | $93 | $101 | $112 | $127 |
| 6.8% | $78 | $83 | $89 | $97 | $108 |
| 7.3% | $71 | $75 | $80 | $86 | $94 |
| 7.8% | $65 | $69 | $72 | $77 | $83 |
| 8.3% | $60 | $63 | $66 | $70 | $75 |
| 8.8% | $56 | $58 | $61 | $64 | $68 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Sunoco LP | SUN | 16.8x | 12.8x | 14.4x | 5.8% | Post-NuStar scale-up; leverage elevated |
| Energy Transfer | ET | 11.0x | 9.0x | 10.5x | 6.9% | Larger diversified midstream peer |
| Enterprise Products | EPD | 12.0x | 10.5x | 11.8x | 6.5% | Best-in-class MLP balance sheet |
| MPLX | MPLX | 11.7x | 9.6x | 10.9x | 7.1% | Fee-based midstream mix |
| Plains All American | PAA | 12.5x | 8.8x | 11.2x | 7.8% | Higher commodity sensitivity |
| SUN 5yr Hist. | SUN Hist. | 13-16x | 9-11x | 10-13x | 6-8% | Current EV/EBITDA is above prior range after acquisition rerating |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $3.730 |
| Current Yield | 5.76% |
| Consecutive Growth Years | 3 |
| 1-yr DPS CAGR | +4.1% |
| 3-yr DPS CAGR | +4.2% |
| 5-yr DPS CAGR | +2.5% |
| 10-yr DPS CAGR | +1.2% |
| Payout Ratio (DPS/EPS) | 160.5% ⚠️ |
| FCF Payout Ratio | 121.2% ⚠️ |
| Sustainability Verdict | Watch |
The distribution remains investable because Sunoco is an MLP and the reported EPS payout ratio is not the right anchor, but coverage is still tighter than ideal after the NuStar deal. This is a cash-flow and leverage story: if integration executes and EBITDA stays above $1.6B, the payout is manageable; if leverage remains high or volumes weaken, distribution growth could stall.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $4.68 | — | — | — | Actual |
| 2023 | $3.65 | — | — | — | Actual |
| 2024 | $6.00 | — | — | — | Actual |
| 2025 | $2.28 | — | — | — | Actual |
| 2026 | $1.86 | $6.08 | $9.70 | 8 | Estimate |
| 2027 | $1.78 | $7.08 | $11.21 | 8 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $25.7B | — | — | — | Actual |
| 2023 | $23.1B | — | — | — | Actual |
| 2024 | $22.7B | — | — | — | Actual |
| 2025 | $25.2B | — | — | — | Actual |
| 2026 | $40.0B | $41.2B | $42.9B | 8 | Estimate |
| 2027 | $40.4B | $41.6B | $43.2B | 8 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $66.83 | Range $57–$73
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Jeremy Tonet | JP Morgan | Buy | $73 | +12.8% |
| Ned Baramov | Wells Fargo | Buy | $71 | +9.7% |
| Justin Jenkins | Raymond James | Strong Buy | $70 | +8.1% |
| Ned Baramov | Wells Fargo | Buy | $67 | +3.5% |
| Selman Akyol | Stifel | Strong Buy | $64 | -1.1% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $0.09 vs $0.64 | $-0.55 ❌ | $8.6B vs $6.0B | +$2.6B ✅ | Distribution maintained |
| Q3 2025 | $0.64 vs $0.97 | $-0.33 ❌ | $6.0B vs $5.4B | +$0.6B ✅ | Maintained |
| Q2 2025 | $0.97 vs $1.21 | $-0.24 ❌ | $5.4B vs $5.2B | +$0.2B ✅ | Maintained |
| Q1 2025 | $1.21 vs $0.75 | +$0.46 ✅ | $5.2B vs $5.3B | $-0.1B ❌ | Maintained |
(e) Confidence Band Commentary
Analyst coverage is solid but not deep, and the range is wide because 2026-2027 earnings depend heavily on post-acquisition integration, financing cost normalization, and how much of the business mix shifts toward steadier logistics cash flow. Revenue consensus is tightly clustered around the NuStar step-up, but EPS dispersion remains high enough that Sunoco deserves a wider valuation band than a utility-like income name.
💡 Investment Thesis
- Right model, right asset: Sunoco is an MLP and should be valued on distributable equity cash flows, not a WACC-based DCF. The market buys SUN for the distribution stream and the durability of that stream after the NuStar transformation.
- NuStar improves the business mix: The acquisition materially raises exposure to pipelines, terminals, and storage, which are structurally better assets than pure wholesale fuel distribution because their cash flows are more fee-based and less volume-sensitive.
- The balance sheet is the real risk: Total debt jumped to roughly $14.9B, pushing leverage well above where a conservative income investor would want it. Sunoco can grow into that burden, but that is the key variable controlling upside.
- Income is attractive, valuation is not screamingly cheap: A near-6% cash yield with modest distribution growth is compelling, but the units already trade close to consensus fair value. This is not the kind of setup that justifies an aggressive Strong Buy call at the current price.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2017 (~9 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
+167,515 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Sunoco LP (SUN) Leadership & Management Team Analysis - Simp
Sunoco's CEO is Joe Kim, appointed in Jun 2017, has a tenure of 8.33 years. total yearly compensation is $6.30M, comprised of 12.7% salary and 87.3% bonuses, including company stock and options. directly owns 0.16% of
Sunoco's CEO is Joe Kim, appointed in Jun 2017, has a tenure of 8.33 years. total yearly compensation is $6.30M, comprised of 12.7% salary and 87.3% bonuses, including company stock and options. directly owns 0.16% of
Board of Directors & Senior Management | Sunoco LP - Sunoco
Kim held the position of Chief Operating Officer at Pizza Hut, where he was responsible for management of all operations. Prior to that, he worked for 15 years at Valero Energy, where his most recent position was Senior Vic
Kim held the position of Chief Operating Officer at Pizza Hut, where he was responsible for management of all operations. Prior to that, he worked for 15 years at Valero Energy, where his most recent position was Senior Vic
Sunoco LP: Executives - GlobalData
He was also held various other leadership positions during his tenure at the Partnership and Sunoco, Inc. Prior to Sunoco, Mr. Fails served in various operations and engineering roles in the refining business for both Valero Energy and Exxo
He was also held various other leadership positions during his tenure at the Partnership and Sunoco, Inc. Prior to Sunoco, Mr. Fails served in various operations and engineering roles in the refining business for both Valero Energy and Exxo
Capital Allocation & Strategy
Sunoco Issues 2026 Guidance and Capital Allocation Outlook -
The partnership outlined a capital allocation strategy that includes a multi-year pipeline of bolt-on acquisitions of at least $500 million annually, a return to its long-term leverage target of four times in 2026, a target
The partnership outlined a capital allocation strategy that includes a multi-year pipeline of bolt-on acquisitions of at least $500 million annually, a return to its long-term leverage target of four times in 2026, a target
Sunoco LP (SUN) Q1 2025 Earnings Call Highlights: Strong Fin
Q: In 2024, you added more conventional midstream assets to the portfolio, and Parkland is a heavy shift back to fuel distributions. What do you see as the right mix between the two assets for your business longer term? A: Joseph Kim, Presi
Q: In 2024, you added more conventional midstream assets to the portfolio, and Parkland is a heavy shift back to fuel distributions. What do you see as the right mix between the two assets for your business longer term? A: Joseph Kim, Presi
Employee Ratings
Overall Rating
4.1/5 ★★★★☆
Culture Signal
Mixed
Employee Review Excerpts
Sunoco LP Reviews: Pros And Cons of Working At Sunoco LP | G
See how the overall rating varies across different demographic groups at Sunoco LP. ... Schedule is crap. It takes years to get a day spot ... the levels they have to get things approved makes your job nearly impossible to do efficiently an
See how the overall rating varies across different demographic groups at Sunoco LP. ... Schedule is crap. It takes years to get a day spot ... the levels they have to get things approved makes your job nearly impossible to do efficiently an
Sunoco Reviews in Dallas | Glassdoor
How is the work culture at Sunoco in Dallas?Employees in Dallas have rated Sunoco with 4.1 out of 5 for work-life-balance (24.7% higher than company-wide rating), 3.4 out of 5 for diversity and inclusion (6.1% higher than company-wide ratin
How is the work culture at Sunoco in Dallas?Employees in Dallas have rated Sunoco with 4.1 out of 5 for work-life-balance (24.7% higher than company-wide rating), 3.4 out of 5 for diversity and inclusion (6.1% higher than company-wide ratin
Sunoco LP - Company growth is shared with employees but run
Share profits in the form of very generous annual bonuses. Allow a 1/2 day Fridays if work 4-10 hours days M-Th. Very nice during the summer. Very collaboritive work culture.
Share profits in the form of very generous annual bonuses. Allow a 1/2 day Fridays if work 4-10 hours days M-Th. Very nice during the summer. Very collaboritive work culture.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Accumulate — Sunoco LP (SUN)
Current price: $64.74 | Analyst Avg PT: $66.83
$75
🔴 Bear
$89
📊 Base
$108
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$60 | Begin position |
| Tier 2 — Add | ≤$57 | Add on weakness |
| Tier 3 — Full | ≤$55 | Full allocation |
| Sell Alert | ≥$74 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. SUN is a solid income vehicle with a credible path to modest distribution growth, but after the recent run the units sit near fair value. At about $64.74, the base case implies limited upside while leverage remains the gating factor for a rerating.
Starter zone: below $60. Full-position zone: $55 or better. Becomes a trim: above $74 unless cash-flow growth materially outpaces current expectations.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 50.95 |
| Average Cost Basis | $52.94 |
| Current Market Value | $3,299 |
| Unrealized P&L | $+601 (+22.3%) |
| Annual DPS | $3.730/yr |
| Annual Dividend Income | $190/yr |
| Current Yield (at price) | 5.76% |
| Yield on Cost | 7.05% |
| vs Target (~$200K) | $3,299 / $200,000 (2%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | SUN is a master limited partnership. Per Bore Family Office policy, MLPs are valued with a 3-stage DDM using cost of equity, not WACC. |
| Ke Build | Rf 4.30% + beta 0.46 × 5.5% ERP = 6.81% cost of equity. Low beta reflects the income-oriented, toll-road-like nature of the partnership despite elevated leverage. |
| Base Distribution | Used annualized cash distribution of $3.73/unit based on the latest quarterly rate of $0.9317. This is the correct distributable equity cash-flow anchor for SUN. |
| Growth Calibration | Base case uses 3.0% Stage 1 distribution growth, roughly in line with recent distribution growth and what seems supportable while management digests the NuStar transaction. Bear slows to 1.5%; bull assumes 4.5%. |
| Sanity Check | Consensus analyst price target is $66.83 with a $57-$73 range. The DDM base case is deliberately kept close to that band rather than forcing an aggressive upside narrative that the current yield and leverage profile do not support. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.