Is it too scary to buy a refiner right now? Western Refining Inc. ( WNR - Analyst Report ) is trading with a forward P/E of just 4.9 as investors have fled the refining and energy stocks. Yet this Zacks #1 Rank (Strong Buy) is still expected to see double digit earnings growth in 2012.

Western Refining is an independent oil refiner that operates four refineries, two terminals, and four asphalt terminals as well as retail service stations and convenience stores in Arizona, Colorado, Texas and New Mexico.

Western also transports petroleum products throughout the southwest.

Paying Down Debt

Refiners make money when the crack spreads (the difference between Brent and WTI) remain elevated. That has been the case so far in 2012.

With a strong refining margin environment, Western Refining has used its extra cash to pay down debt.

On May 31, the company announced it had made a $78.3 million prepayment on its Term Loan, bringing its year to date repayments to about $183 million. That is higher than its full year goal of between $150 and $175 million.

Additionally, it indicated that if the refining margin remains favorable later in the year, it may make further prepayments.

As of the end of the first quarter, which was Mar 31, 2012, total debt was $777 million and cash on hand was $374.3 million.

Analysts Are Bullish On 2012

With the crack spreads remaining elevated, the analysts are bullish about 2012.

6 estimates have risen for 2012 in the last 30 days even though the company only met the estimate when it reported first quarter results on May 3. Earnings were 81 cents in Q1 compared to just 27 cents in the year ago quarter.

The 2012 Zacks Consensus Estimate has jumped 23% in the last 2 months to $3.99 from $3.08.

That is earnings growth of 32% as the company only earned $3.03 in 2011.

Western Refining Just Keeps Getting Cheaper

Shares rose in early 2012 but since then have been trading in a narrow trading range as fear has gripped energy investors. Check out the 6 month see-saw action.

Western Refining continues to be cheap by all metrics.

In addition to a forward P/E under 5, Western Refining has a price-to-book ratio of 2.3. A P/B ratio under 3.0 usually indicates value.

Western Refining also has a really low price-to-sales ratio of just 0.2. This is lower than some of its peers, like HollyFrontier (HFC) which has a P/S of 0.3. A P/S under 1.0 can mean a company is undervalued.

Western Refining also rewards shareholders with a dividend yielding 0.8%. This is under its peers such as HollyFrontier, whose dividend yields 2% and is paying a special dividend with its free cash, but Western is choosing to pay down the debt instead.

Western Refining is cheap and the elevated crack spreads are expected to last through 2012. If you're looking for a value stock in the energy sector with rising earnings estimates, this could be it.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.