We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's Ahead for Oil Refining Stocks in Q2 Earnings? PBF, PSX
Read MoreHide Full Article
With the Q2 earnings season taking center stage, investors are waiting to see how the major companies perform. However, the sentiment regarding the energy sector remains mixed. This is mainly because oil prices recently slipped to the lowest-ever level since May 9, 2016, while natural gas futures showed modest increase.
Per the Earnings Trends report, the general outlook for energy sector remains bearish as it is expected to register a massive 77.3% year-over-year decrease in earnings due to a 26% plunge in revenues. Excluding the impact of the energy sector, the S&P 500 index would witness earnings decline of 0.1%.
Nonetheless, investors need not steer clear of the oil stocks as there are still a handful of them that are showing strength amid the volatile scenario. In fact, the decline in oil prices has come as a boon in disguise for the U.S. downstream (refining and marketing) stocks, which have been making profits.
The business of the downstream players is negatively correlated with crude prices. This is because the companies use oil as an input from which they derive refined petroleum products like gasoline – the prime transportation fuel in the U.S. Hence, the lower the oil price, the higher will their profits be.
With the Q2 earnings season in full swing and a number of oil majors having reported their quarterly numbers, a study of estimated figures of the companies reporting their earnings shows a modest improvement from the exceptionally weak levels in the last couple of quarters. However, growth for the benchmark S&P 500 index is likely to be negative for the fifth quarter in a row. Ten of the 16 Zacks sectors (as of Jul 27) are projected to underperform.
So far, the 208 S&P 500 members that have released their Q2 results account for a total of 50.5% of the index’s market capitalization. Total earnings for these 208 companies are down 4.7% year over year on 0.4% higher revenues. Of these, about 73.1% beat earnings per share (EPS) estimates and 51.9% surpassed top-line expectations.
Meanwhile, let’s have a look at how some of these refining companies are poised ahead of their earnings announcements.
PBF Energy Inc. (PBF - Free Report) is expected to release Q2 numbers on Jul 29, before the market opens. The company has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%. Note that we caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
In the preceding three-month period, the refiner and supplier of petroleum products aa negative earnings surprise of 58.54%. The underperformance is attributable to a sharp decline in activity and the ongoing pricing pressure as exploration and production companies further adjust their spending to combat the freefall in commodity prices.
Energy manufacturing and logistics company Phillips 66 (PSX - Free Report) is expected to report Q2 earnings on Jul 29. Our proven model does not conclusively show that Phillips 66 is likely to beat on earnings this quarter. This is because the company has an Earnings ESP of 0.00% and Zacks Rank #5.
In the last quarter, the company’s adjusted earnings of 67 cents per share missed the Zacks Consensus Estimate of 86 cents. The bottom line also deteriorated from the year-ago quarter level of $1.51 per share. However, it must be noted that the company outpaced the Zacks Consensus Estimate three of the last four quarters. (Read more: Phillips 66 Q2 Earnings: Disappointment in Store?)
Don’t miss out on our full earnings release articles for these two oil refining stocks, as the actual results might hold some surprises!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's Ahead for Oil Refining Stocks in Q2 Earnings? PBF, PSX
With the Q2 earnings season taking center stage, investors are waiting to see how the major companies perform. However, the sentiment regarding the energy sector remains mixed. This is mainly because oil prices recently slipped to the lowest-ever level since May 9, 2016, while natural gas futures showed modest increase.
Per the Earnings Trends report, the general outlook for energy sector remains bearish as it is expected to register a massive 77.3% year-over-year decrease in earnings due to a 26% plunge in revenues. Excluding the impact of the energy sector, the S&P 500 index would witness earnings decline of 0.1%.
Nonetheless, investors need not steer clear of the oil stocks as there are still a handful of them that are showing strength amid the volatile scenario. In fact, the decline in oil prices has come as a boon in disguise for the U.S. downstream (refining and marketing) stocks, which have been making profits.
The business of the downstream players is negatively correlated with crude prices. This is because the companies use oil as an input from which they derive refined petroleum products like gasoline – the prime transportation fuel in the U.S. Hence, the lower the oil price, the higher will their profits be.
With the Q2 earnings season in full swing and a number of oil majors having reported their quarterly numbers, a study of estimated figures of the companies reporting their earnings shows a modest improvement from the exceptionally weak levels in the last couple of quarters. However, growth for the benchmark S&P 500 index is likely to be negative for the fifth quarter in a row. Ten of the 16 Zacks sectors (as of Jul 27) are projected to underperform.
So far, the 208 S&P 500 members that have released their Q2 results account for a total of 50.5% of the index’s market capitalization. Total earnings for these 208 companies are down 4.7% year over year on 0.4% higher revenues. Of these, about 73.1% beat earnings per share (EPS) estimates and 51.9% surpassed top-line expectations.
Meanwhile, let’s have a look at how some of these refining companies are poised ahead of their earnings announcements.
PBF Energy Inc. (PBF - Free Report) is expected to release Q2 numbers on Jul 29, before the market opens. The company has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%. Note that we caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
PBF ENERGY INC Price and EPS Surprise
PBF ENERGY INC Price and EPS Surprise | PBF ENERGY INC Quote
In the preceding three-month period, the refiner and supplier of petroleum products aa negative earnings surprise of 58.54%. The underperformance is attributable to a sharp decline in activity and the ongoing pricing pressure as exploration and production companies further adjust their spending to combat the freefall in commodity prices.
Energy manufacturing and logistics company Phillips 66 (PSX - Free Report) is expected to report Q2 earnings on Jul 29. Our proven model does not conclusively show that Phillips 66 is likely to beat on earnings this quarter. This is because the company has an Earnings ESP of 0.00% and Zacks Rank #5.
PHILLIPS 66 Price and EPS Surprise
PHILLIPS 66 Price and EPS Surprise | PHILLIPS 66 Quote
In the last quarter, the company’s adjusted earnings of 67 cents per share missed the Zacks Consensus Estimate of 86 cents. The bottom line also deteriorated from the year-ago quarter level of $1.51 per share. However, it must be noted that the company outpaced the Zacks Consensus Estimate three of the last four quarters. (Read more: Phillips 66 Q2 Earnings: Disappointment in Store?)
Don’t miss out on our full earnings release articles for these two oil refining stocks, as the actual results might hold some surprises!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>