Calumet Specialty Products Partners, L.P.
(CLMT - Snapshot Report
) has the crack spread in its favor. This Zacks #1 Rank (Strong Buy) is expected to post earnings growth of 75% in 2012. Yet it is also a value stock, with a forward P/E of just 11.2.
Calumet produces customized lubricating oils, solvents, waxes and asphalt from crude oil and other feedstock. The Indianapolis-based partnership also makes fuel products like gasoline, diesel and jet fuel.
Calumet is a master limited partnership ("MLP") which distributes most of its earnings to unitholders. It has 8 plants in 5 states.
Public Offering Announced
On May 7, Calumet Specialty Products announced that it would offer 6 million common units in a public offering. The proceeds would be used to repay borrowings outstanding under its revolving credit facility and for general partnership purposes such as working capital, captial expenditures and acquisitions.
Investors didn't like the news, and the stock sold off hard as a result with shares down 10%.
Lots of Value
Shares had soared in 2012 but remained cheap as earnings estimates rose. With the recent sell-off, it's even cheaper.
In addition to a P/E of just 11.2, under the S&P 500 average of 13.2, the partnership has a price-to-book of 2.3. A P/B under 3.0 usually indicates value.
Calumet has further value indicators as well. The partnership has a price-to-sales ratio of just 0.4. A P/S ratio under 1.0 can mean a company is undervalued.
A Miss In Q1
On May 2, Calumet reported its first quarter results. It missed on the Zacks Consensus by 2 cents. Earnings per unit were 47 cents compared to the consensus of 49 cents.
For the 3 months ended Mar 31, total volumes for both the Specialty and Fuel Products segments rose 81.9%. The increase was boosted by increased sales volume of lubricating oils as well as incremental sales of fuel products and asphalt subsequent to the Superior Acquisition.
It benefitted from the widening crack spreads driven by heavy Canadian and Bakken crude oil differentials to NYMEX WTI in the quarter.
Huge Dividend Raised Again
With the crack spread remaining favorable, Calumet gave back to the unitholders. It raised the quarterly distribution by 3 cents to 56 cents per unit.
That is a 5.7% increase from the fourth quarter of 2011 and a 17.9% increase from the first quarter of a year ago.
The dividend is currently yielding a juicy 8.4%.
2012 Zacks Consensus Estimates Rise
Analysts are still upbeat about 2012 despite the earnings miss in the first quarter.
2 estimates have been revised higher in the last week pushing up the Zacks Consensus to $2.39 from $2.14. That is earnings growth of 75% as the company earned just $1.36 in 2011.
Calumet Specialty Products is that rare combination of both value and growth in the specialty energy sector.
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.