Sunoco LP (SUN): A Strong Buy Amid Earnings Growth and Strategic Acquisitions

In the volatile landscape of 2025, energy sector investors have found a rare gem in Sunoco LP (SUN). With a compelling combination of earnings resilience, a forward P/E discount to peers, and a transformative acquisition strategy, SUN has emerged as a standout value investment. This analysis delves into the factors driving its outperformance of the S&P 500, its strategic positioning post-Parkland acquisition, and the robust fundamentals that justify its current "Strong Buy" rating.

Outperformance of the S&P 500: A Resilient Energy Play

Sunoco LP's stock has consistently outpaced the S&P 500 in 2025, reflecting its ability to navigate sector-specific challenges. Year-to-date as of April 2025, SUN delivered a 16.82% return, significantly outperforming the broader market according to Nasdaq reports. Even in the final weeks of 2025, when the S&P 500 closed at 6,845.50 on December 31 per Yahoo Finance, SUN demonstrated resilience. Despite a dip from $55.72 on December 1 to $52.41 by year-end according to Yahoo Finance, the stock rebounded to $53.44 by January 5, 2026, signaling investor confidence in its long-term prospects per Yahoo Finance.This outperformance is underpinned by SUN's consistent distribution growth-up 9% since 2022 according to Nasdaq reports-which has attracted income-focused investors amid a challenging energy market.

Forward P/E Discount: A Value Proposition in a High-Cost Sector

Sunoco's valuation metrics further strengthen its appeal. As of early 2026, SUN trades at a forward P/E ratio ranging from 7.16 to 9.58 per Intellectia analysis, a stark discount to the energy sector's average of 16.58 to 20.54 per Intellectia analysis. This undervaluation is particularly striking given the company's recent operational improvements. For instance, in Q3 2025, SUN reported Adjusted EBITDA of $496 million, with its Pipeline Systems and Fuel Distribution segments contributing $182 million and $232 million, respectively according to Sunoco's press release. These results, coupled with the Parkland acquisition's anticipated synergies, position SUN as a high-conviction value play.

Strategic Acquisition of Parkland: A Game-Changer

The $9.1 billion acquisition of Parkland Corporation, finalized in Q3 2025, represents a pivotal strategic shift for SUN. This deal, expected to close in late 2025, creates the largest independent fuel distributor in the Americas per Sunoco's press release. Parkland's Q3 2025 Adjusted EBITDA of $540 million according to Sunoco's press release underscores its financial strength, while the combined entity's expanded footprint in Canada, the Caribbean, and the U.S. enhances SUN's geographic diversification. Analysts project over 10% accretion to distributable cash flow per unit and $250 million in annual synergies by 2028 according to Seeking Alpha. Additionally, the acquisition preserves Parkland's Burnaby Refinery, ensuring SUN's continued investment in North American energy infrastructure per Sunoco's press release.

Zacks Rank Upgrade and Revised EPS Estimates: Navigating Earnings Challenges

Despite downward revisions to 2025 EPS estimates-projected to decline by 23.19% compared to 2024 per Intellectia analysis-SUN's stock has risen 5.40% over the past three months per Intellectia analysis. This divergence highlights investor optimism about the company's strategic initiatives. Zacks Research upgraded SUN to a "Strong Buy" (Rank #1) in early January 2026 according to MarketBeat, citing its undervaluation and growth potential. Analysts now forecast 2025 EPS between $1.66 and $1.70 per Intellectia analysis, with a consensus price target of $64, reflecting a potential 20% upside from its January 5 closing price of $53.44 per MarketBeat alert.

Distribution Growth: A Pillar of Value

SUN's distribution history further cements its value proposition. With a 9% compound annual growth rate since 2022 according to Nasdaq reports, the company has maintained its appeal to income investors even as earnings projections dipped. This consistency is critical in a sector where cash flow stability often outweighs short-term earnings volatility.

Conclusion: A Compelling Case for Immediate Investment

Sunoco LP's combination of outperformance, strategic acquisitions, and undervaluation makes it a rare opportunity in the energy sector. While 2025 earnings projections are modest, the company's forward P/E discount, Zacks Rank upgrade, and Parkland acquisition-driven synergies justify a long-term investment thesis. For value-driven investors seeking exposure to a resilient energy play, SUN offers a compelling risk-reward profile.