Sunoco Stock Climbs Despite 2026 Profit Guidance Miss
Investors focus on dividend growth and expansion plans, shrugging off an EBITDA forecast that fell short of some prior expectations.
Sunoco LP (NYSE: SUN) shares traded higher on Tuesday, demonstrating investor confidence even as the fuel distributor issued 2026 profit guidance that fell below some earlier third-party estimates. The market's positive reception suggests investors are prioritizing shareholder returns and long-term strategy over a single forward-looking metric.
In Tuesday trading, units of Sunoco rose approximately 1.35% to $53.44. The move came after the Dallas-based partnership announced during an investor presentation that it expects full-year 2026 adjusted EBITDA to be between $3.1 billion and $3.3 billion. While a substantial figure, this projection is below a prior forecast from S&P Global Ratings, which had anticipated a range of $3.35 billion to $3.70 billion for the 2026-2027 period following the company's recent acquisitions.
The guidance is the first major long-term forecast since Sunoco closed its significant acquisition of NuStar Energy L.P. in May 2024, a deal aimed at diversifying its business with a larger crude oil and refined products pipeline network. The new EBITDA target incorporates expected synergies from this and other recent transactions.
However, offsetting the softer-than-expected profit outlook were several key announcements aimed at rewarding unitholders and fueling growth. In what appeared to be the main driver of investor sentiment, Sunoco management committed to a distribution growth rate of at least 5% for 2026. For income-oriented investors who favor Master Limited Partnerships (MLPs) for their steady payouts, this pledge provided a significant positive catalyst.
"The company expects its Distributable Cash Flow per Common Unit to increase for the ninth consecutive year," Sunoco stated in a press release detailing its long-term plan. This focus on direct shareholder returns likely overshadowed the less bullish EBITDA projection.
Furthermore, Sunoco outlined a robust capital investment strategy. The company plans to allocate at least $600 million toward growth projects and between $400 million and $450 million for maintenance capital expenditures. It also signaled its intent to continue expanding through a strategy of bolt-on acquisitions, budgeting at least $500 million for such deals annually.
Financial discipline was another key theme. Following the leverage increase to finance the NuStar acquisition, Sunoco announced it expects to return to its long-term leverage target of 4.0x in 2026, a move that reassures investors about the partnership's balance sheet stability.
The market's reaction indicates that investors are weighing the comprehensive financial strategy presented by Sunoco. The combination of a strong, double-digit dividend yield, a commitment to further distribution growth, a clear plan for expansion, and a path back to target leverage appears to have created a compelling case that overshadowed the single data point of a guidance miss against a rating agency's prior, and perhaps more optimistic, forecast.