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PBF Energy (PBF) Surges 57.4% Since Q3 Earnings: Here's Why

Zacks Equity Research
·5-min read

PBF Energy Inc. PBF stock surged 57.4% since it reported third-quarter 2020 results on Oct 29. Despite weak quarterly results, investors are appreciating the company’s cost-containment efforts, which resulted in the share price uptick. Moreover, hopes of a potential coronavirus vaccine are boosting the refining sector, which is anticipated to lead to a better energy demand environment.

Q3 Results

It reported third-quarter 2020 loss of $2.87 per share, wider than the Zacks Consensus Estimate of a loss of $2.57. The company reported earnings of 66 cents per share in the year-ago quarter.

Total revenues decreased to $3,667.5 million from $6,430.5 million in the prior-year quarter. Moreover, the top line missed the Zacks Consensus Estimate of $4,075 million.  

The weak quarterly results can be attributed to lower crude oil and feedstock throughput volumes, decreased gross refining margin, as well as increased refinery operating expense.

PBF Energy Inc. Price, Consensus and EPS Surprise

PBF Energy Inc. Price, Consensus and EPS Surprise
PBF Energy Inc. Price, Consensus and EPS Surprise

PBF Energy Inc. price-consensus-eps-surprise-chart | PBF Energy Inc. Quote

Segmental Performance

Operating loss at the Refining segment was $367 million against profit of $169.8 million a year ago.

The company generated a profit of $55.6 million from the Logistics segment, which reflects an improvement from the prior-year quarter’s $44.4 million.

Throughput Analysis

Volumes:

For the quarter under review, crude oil and feedstocks throughput volumes were 706.1 thousand barrels per day (bpd), lower than the year-ago figure of 850.9 thousand bpd.

The East Coast, Mid-Continent, Gulf Coast and West Coast regions accounted for 35.6%, 15.4%, 17.8% and 31.2%, respectively, of the total oil and feedstock throughput volume. 

Margins:

Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $2.98, significantly lower than the year-earlier quarter’s $8.87.

Refining margin per barrel of throughput was $2.41 in the East Coast, down from $7.32 in the year-earlier quarter. Realized refining margin was $2.48 per barrel in the Gulf Coast, down from $8.30 in the prior-year period. Moreover, the metric was $4.43 per barrel in the West Coast, down from $9.77 a year ago. Also, the metric was $1.87 per barrel in the Mid-Continent compared with $12.24 a year ago.

Refinery operating expense per barrel of throughput was $6.96, higher than $5.26 in the year-ago quarter.

Costs & Expenses

Total costs and expenses for the reported quarter were $4,010.2 million, significantly lower than $6,278.6 million in the year-ago period. Cost of sales — which includes operating expenses, cost of products and others — amounted to $3,980.8 million, lower than the year-ago level of $6,244.4 million. General and administrative expenses fell to $46.6 million from $64.7 million in the year-ago period.

Capital Expenditure & Balance Sheet

Through the third quarter, the company spent $53 million capital on refining operations and $1.7 million on logistics businesses.

At quarter-end, it had cash and cash equivalents of $1,282.6 million, up from the second-quarter level of $1,225.2 million. As of Sep 30, it had a total debt of $4,411.1 million, up from the second quarter’s $4,092.8 million. This resulted in total debt to capitalization of 64%. 

Guidance

The coronavirus pandemic has destroyed energy demand growth. The company expects demand to remain in the bearish zone until a medical solution is available for people. As such, it reduced crude oil processing in refineries in the third quarter. Moreover, the refineries are expected to run at reduced utilization rates. Near-term throughput volumes will likely be in the range of 700,000-800,000 bpd. It reiterated refining capital expenditure to be $360 million for 2020.

Notably, the company expects the East Coast refining reconfiguration to be completed by 2020-end.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space include Matador Resources Company MTDR, Antero Resources Corporation AR and Global Partners LP GLP, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.

Antero Resources’ bottom line for 2021 is expected to rise 30.5% year over year.

Global Partners’ bottom line for 2020 is expected to rise 118.1% year over year.

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Global Partners LP (GLP) : Free Stock Analysis Report
 
PBF Energy Inc. (PBF) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
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