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PBF Energy (PBF) Down 10.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for PBF Energy (PBF - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PBF Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

PBF Energy’s Q3 Earnings Beat Estimates, Revenues Surge

PBF EnergyInc.  posted third-quarter 2018 profit of $1.13 a share, beating the Zacks Consensus Estimate of $1.04. However, the bottom line declined from the year-ago quarter’s $1.44.

Total revenues grew to $7,646.4 million from $5,479 million in the prior-year quarter. The top line also surpassed the Zacks Consensus Estimate of $6,418 million as well.

Higher throughput volumes from the all the regions except the Gulf Coast primarily led to the better-than-expected results in the third quarter of 2018. The results were partially offset by the rise in per barrel refining operating expense and year-over-year lower gross refining margin from the Gulf Coast and West Coast regions.

Segmental Performance

Operating income at the Refining segment was $321.4 million, which fell from $609.3 million in the year-ago quarter due to lower throughput margins.

The company generated profit of $37.6 million from the Logistics segment, which is below the prior-year quarter’s $39.2 million.

Throughput Volumes

In the quarter under review, crude oil and feedstocks throughput volumes were 888.4 thousand barrels per day (BPD), up from 849.7 thousand BPD in the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate of 872 thousand BPD.

The East Coast, Mid-Continent, Gulf Coast and West coast regions accounted for approximately 39.9%, 19.4%, 22% and 18.7%, respectively, of the total oil and feedstocks throughput volume.

Throughput Margins

Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $9.25, beating the Zacks Consensus Estimate of $9.08. However, the figure was down from the year-earlier quarter’s $10.22.

Refining margin per barrel of throughput was $7.52 in the East Coast, up from $6.96 in the year-earlier quarter. The metric was $14.11 per barrel in the Mid-Continent, higher than $12.87 a year ago. Throughput margin realized was $7.21 per barrel in the Gulf Coast, down from $10.36 in the prior-year quarter. The metric was $10.28 per barrel in the West Coast, down from $14.81 in the prior-year quarter.

Refining operating expense per barrel of throughput was $5.01, higher than $4.98 in the year-ago quarter.

Capital Expenditure & Balance Sheet

Through the third quarter, the company spent $79.7 million capital on refining operations and $21 million for logistics businesses.

At the end of the quarter, the company had cash and cash equivalents of $1,059.2 million, along with total debt of $2,177.1 million, with a debt-to-capitalization ratio of 37%.

Guidance

PBF Energy projects total daily throughput volumes for fourth-quarter 2018 from the East Coast in the range of 330,000-350,000 barrels, while the same from the Mid-Continent is expected in the band of 145,000-155,000 barrels. Total daily throughput volumes at the Gulf Coast are expected in the range of 185,000-195,000 barrels, while that of the West Coast it is anticipated within 165,000-175,000 barrels.

For full-year 2018, the company anticipates total daily throughput volumes from the East Coast between 320,000 barrels and 340,000 barrels. The same from the Mid-Continent is expected at 145,000-155,000 barrels, while the Gulf Coast is expected to generate 185,000-195,000 barrels. The company expects total daily throughput volumes within 170,000-180,000 barrels in the West Coast.

Along with the earnings report, the company announced that it will restart its Chalmette refinery idled cocker of 12,000 BPD capacity. It expects the unit to come online by 2019-end and cost around $110 million. PBF Energy’s total coking capacity will increase to 42,000 BPD once the idled coker restarts.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.24% due to these changes.

VGM Scores

At this time, PBF Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PBF Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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