Friday morning, U.S. oil refiner Sunoco (SUN) announced that it logged a third-quarter profit rather than a loss like last year's results.

Sunoco pulled in 54 cents per diluted share ($65 million) in the most recent quarter, better than the loss of 29 cents per share from a year ago. On an adjusted basis, Sunoco earned 22 cents per share. The stronger results were attributed to an improvement in earnings from the steel-making coal and logistics businesses.

Time was, if you were an oil refiner, that was money in the bank. My, how times have changed for U.S. refiners, including Sunoco Inc. (SUN), first recommended on April 20, 2009, at a price of $26.58. It's a close call, but I'm reiterating my buy rating.

Here's why: Sunoco has been hurt by the high oil price/low gasoline demand condition pervasive in the giant U.S. market. Further, Sunoco's primarily sweet crude oil refining prevents it from capitalizing on the larger-margin sour crude refining. However, that has enabled SUN to produce larger amounts of higher-grade products.

I'm Reiterating my Buy rating for Sunoco, Inc. (NYSE: SUN), first recommended on April 20, 2009 at a price of $26.58, but there are qualifiers, so close attention is warranted. If you bought SUN in April, you're up about 19%.

Sunoco has been hurt by the high oil price/low gasoline demand condition pervasive in the giant U.S. market that's squeezed margins. Further, Sunoco's primarily sweet crude oil refining operation prevents it from capitalizing on larger-margin sour crude refining. However, the sweet focus has enabled SUN to produce larger amounts of higher-grade products.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Aetna Inc. (NYSE: AET) reported better-than-expected Q3 earnings and revenue, sending shares higher.
• Allergan Inc. (NYSE: AGN) reported better-than-expected Q3 numbers, sending shares higher.
• Bare Escentuals Inc. (NASDAQ: BARE) Q3 profit easily topped analysts' estimates, and shares surged.
• Cabot Oil & Gas Corp. (NYSE: COG) received an upgrade following the release of its Q3 numbers.
• Estee Lauder Companies Inc. (NYSE: EL) reported strong Q1 results, sending shares higher.
• E*Trade Financial Corp. (NASDAQ: ETFC) reported a smaller-than-expected net loss for Q3.
• Goodyear Tire & Rubber Co. (NYSE: GT) Q3 earnings topped estimates and revenue was up sequentially.

Sunoco, Inc. (NYSE: SUN) has underperformed, but I'm nevertheless Reiterating my Buy rating for the shares, first recommended on April 20, 2009 at a price of $26.58. Here's why:

Sunoco focuses on refining a relatively high percentage of higher-grade products, but demand has been depressed, due to the recession. Given a likely stabilization in U.S. gasoline demand later in 2009, revenue should rebound, which should send institution investors back into SUN.

The world is awash in oil. For now. Gasoline prices are at moderate levels. For now. And analysts say slack demand will keep a lid on gasoline prices this summer. Well, as the singer Meatloaf would say, two out of three ain't bad.

Given the continuing U.S. recession (which has taken many drivers off the road), all signs point to moderate gasoline prices for the duration of the summer, unless the unexpected occurs, such as a refinery outage or a damaging hurricane season. At that point gasoline prices could spike and begin to trend higher -- as they so often do in the summer -- exasperating many, unless you've purchased shares in Sunoco (NYSE: SUN).

If you've been watching earnings this past week, or if you read last week's Week in Preview, then this coming week may leave you feeling a bit like Bill Murray in Groundhog's Day. That is, again analysts surveyed by Thomson Reuters expect earnings declines to be more frequent and deeper than earnings gains.

Motorola Inc. (NYSE: MOT), Dow Chemical Co. (NYSE: DOW), Anadarko Petroleum Corp. (NYSE: APC), IAC Interactivecorp (NASDAQ: IACI), Moody's Corp. (NYSE: MCO), Elizabeth Arden Inc. (NASDAQ: RDEN), Devon Energy Corp. (NYSE: DVN), Diebold Inc. (NYSE: DBD), Tyco International Ltd. (NYSE: TYC), United Parcel Service (NYSE: UPS), Cisco Systems Inc. (NASDAQ: CSCO), Polo Ralph Lauren Corp. (NYSE: RL), ITT Corp. (NYSE: ITT), and Walt Disney Co. (NYSE: DIS) are scheduled to report quarterly results this week, and they're all expected to report double-digit declines in earnings.

But again this week, let's take a look who Wall Street feels may have done well in the past quarter.

The focus of last week's preview was on oil and energy companies, and we saw that big oil had a good week, reporting better-than-expected results and record profits driven by high prices in the third quarter. Energy-related companies are well represented again this week and expectations in general remain high.

Early in the week, analysts surveyed by Thomson Financial anticipate that the big earnings gainers will include EOG Resources Inc. (NYSE: EOG), Anadarko Petroleum Corp. (NYSE: APC), and Cimarex Energy Co. (NYSE: XEC), which are expected to post profits of $2.24 per share (up 64.7% from a year ago), $1.48 per share (up 52.7%) and $2.26 per share (up 61.1%) respectively. All three of them have offered positive surprises in recent quarters, and analysts on average recommend buying EOG and Anadarko. Other expected big earnings gainers early in the week include Forest Oil Corp. (NYSE: FST), Pioneer Natural Resources Co. (NYSE: PXD), Comstock Resources Inc. (NYSE: CRK), and MasterCard Inc. (NYSE: MA). The earnings of phosphates producer Innophos Holdings Inc. (NASDAQ: IPHS) are expected to have risen 92.3% to $3.37 per share. Innophos beat estimates in the previous quarter by a whopping 210%, and analysts have been impressed with Innophos's lack of debt and pricing gains despite the slowing economy, so, on average, they recommend buying IPHS.

Also early in the week, analysts expect Goodyear Tire & Rubber Co. (NYSE: GT), Kaiser Aluminum Corp. (NASDAQ: KALU), and Oshkosh Corp. (NYSE: OSK) to report that their profits fell 52.9% to $0.33 per share, 45.1% to $0.67 per share, and 41.2% to $0.67 per share, respectively. These companies have tended to beat estimates in recent quarters, and the consensus recommendations of analysts are to buy them. However, PMI Group Inc. (NYSE: PMI), one of the largest private mortgage insurance providers in the U.S., is expected to take another hit as the housing slump drags on. The California-based company is expected to have widened its net loss from $1.04 per share a year ago to $2.43 per share in the most recent quarter. Its shares are down 84.5% from a year ago, and have been trading recently near their 52-week low.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

With a turn of the calendar page, we drift into the middle portion of the current quarter, but the earnings season rolls on. Among the many companies scheduled to report quarterly results this coming week are Time Warner Inc. (NYSE: TWX), Cisco Systems Inc. (NASDAQ: CSCO), News Corp. (NYSE: NWS), and Whole Foods Market International (NASDAQ: WFMI). Let's take a look at which companies Wall Street analysts are expecting to be among the top earnings gainers and decliners this week.

Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.

• DRS Technologies Inc. (NYSE: DRS): $0.85 EPS (+95.3%) on revenue of $823.8 million (+12.0%)
• Integrys Energy Group Inc. (NYSE: TEG): $0.40 EPS (+70.0%) on revenue of $2.6 billion (+9.7%)
• Cimarex Energy Co. (NYSE: XEC): $2.53 EPS (+64.4%) on revenue of $599.9 million (+75.4%)
• Forest Oil Corp. (NYSE: FST): $1.51 EPS (+55.6%) on revenue of $456.1 million (+79.1%)
• Devon Energy Corp. (NYSE: DVN): $3.28 EPS (+48.5%) on revenue of $4.1 billion (+38.5%)
• CMS Energy Corp. (NYSE: CMS): $0.13 EPS (+46.2%) on revenue of $1.4 billion (+6.7%)
• Transocean Inc. (NYSE: RIG): $3.23 EPS (+43.0%) on revenue of $3.1 billion (+112.9%)
• Sara Lee Corp. (NYSE: SLE): $0.26 EPS (+38.5%) on revenue of $3.5 billion (+8.9%)
• Williams Companies Inc. (NYSE: WMB): $0.69 EPS (+37.7%) on revenue of $3.4 billion (+20.0%)
• Harris Corp. (NYSE: HRS): $0.99 EPS (+28.3%) on revenue of $1.4 billion (+18.0%)

MOST NOTEWORTHY: Sunoco, Ryanair and HSBC Holdings were today's noteworthy downgrades:

• JP Morgan downgraded Sunoco (NYSE: SUN) to Underweight from Neutral citing expected margin pressure due to high leverage to sweet crude. Goldman also downgraded shares of Sunoco to Neutral from Buy.
  
• Deutsche Bank downgraded shares of Ryanair (NASDAQ: RYAAY) to Sell from Hold as they believe the European airlines sector will trade well below book value until the companies deal with higher oil prices.
  
• UBS cut HSBC (NYSE: HBC) to Neutral from Buy to reflect the potential for higher losses at the company's household unit and weak performance at its U.S. bank.

OTHER DOWNGRADES:

• Broadpoint lowered MTS Medication (NYSE: MPP) to Neutral from Strong Buy.
  
• HSBC cut Southern Peru Copper (NYSE: PCU) to Neutral from Overweight.
  
• Goldman downgraded CNH Global (NYSE: CNH) to Neutral from Buy and PetroChina (PTR) to Sell from Buy.

MOST NOTEWORTHY: Intevac, PrivateBancorp and Potash were today's noteworthy downgrades:

• Intevac (NASDAQ: IVAC) was downgraded to Sell from Neutral. Piper downgraded Intevac citing delays in Gen2 upgrades following Q1 results.
  
• Sandler downgraded PrivateBancorp (NASDAQ: PVTB) following its Q1 earnings results.
  
• RBC Capital downgraded Potash (NYSE: POT), and advised taking some profits.

OTHER DOWNGRADES:

• Soleil downgraded Sunoco (NYSE: SUN) based on weak East Coast refining margins and low marketing and chemical margins.
  
• Calyon downgraded UAL (NASDAQ: UAUA) based on higher fuel costs and the failed merger with Continental (NYSE: CAL).

Sunoco (NYSE: SUN), a petroleum refiner & marketer, is recently up 33 cents to $72.77.

WTI crude futures are up 3.51% to $99.35. Soleil says, "We maintain our positive outlook for the stock, expecting SUN to unlock some of value of the company via strategic actions in 2008. We reiterate our Buy rating and $94/share price target."

SUN overall option implied volatility of 36 is near its 26-week average of according to Track Data, suggesting non-directional price risks.

Volatility Index S&P 500 up 1.30 to 23.63.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Among oil companies Sunoco Inc. (NYSE: SUN) represents a riskier play because SUN meets its crude oil requirement via purchases from third parties, as opposed to company owned operations.

A major strength is Sunoco's strong presence in the U.S.'s East Coast and Midwest markets, which provides considerable earnings stability. However, analysts' 2007-2008 projections for Sunoco's gasoline and petrochemical production are not outstanding. Further, look for refinery maintenance and repairs to hurt refinery production somewhat in 2007, but full refinery production should return in 2008. Sunoco has also been hindered by an emphasis on light sweet crude, which has restricted its ability to take advantage of larger refining margins for sour crude.

The big question is, why is Sunoco worth an investor's attention? Answer: Analysts could be a tad low regarding revenue growth for 2008, particularly given crude oil's persistently high price. Oil, which closed Friday around $89 per barrel, is likely to remain above $70 per barrel for the foreseeable future, and if $100 per barrel is in oil's near future, those 2008 revenue estimates for SUN will prove to be conservative. Further, SUN, which closed Friday at $71.10, has a PE ratio of about 8 -- which makes it a very cheap stock.

MOST NOTEWORTHY: Sunoco, Valero Energy, UBS AG, Lehman Brothers and Supertex were today's noteworthy upgrades:

• Citigroup upgraded both Sunoco (NYSE: SUN) and Valero (NYSE: VLO) to Buy from Hold, as they believe both companies will benefit from the collapse of ethanol prices since refiners are mainly supplied under term contracts struck above current levels.
  
• Merrill upgraded shares of UBS (NYSE: UBS) to Buy from Neutral to reflect the company's lack of exposure to fixed income.
  
• Credit Suisse upgraded shares of Lehman Brothers (NYSE: LEH) to Outperform from Neutral citing improved performance prospects.
  
• Supertex (NASDAQ: SUPX) was raised to Buy from Neutral at Oppenheimer. The firm expects a rebound in all business segments, Medical is entering a seasonally strong September quarter, and notes Motorola (NYSE: MOT) shipments are growing.

OTHER UPGRADES:

• CIBC upgraded Novatel Wireless (NASDAQ: NVTL) to Sector Outperformer from Sector Performer.
  
• Suntrust upgraded American Reprographics (NYSE: ARP) to Buy from Neutral.
  
• Taiwan Semiconductor (NYSE: TSM) was upgraded to Overweight from Neutral at JP Morgan.
  
• Jefferies upgraded Dover Downs (NYSE: DDE) to Buy from Hold.