Why Is PBF Energy (PBF) Down 44% Since Last Earnings Report?

It has been about a month since the last earnings report for PBF Energy (PBF). Shares have lost about 44% 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 its most recent earnings report in order to get a better handle on the important catalysts.

PBF Energy Q4 Earnings & Revenues Beat Estimates

PBF Energyreported fourth-quarter 2019 earnings of 60 cents a share, beating the Zacks Consensus Estimate of 50 cents but deteriorating from the year-ago quarter’s $1.03.

Total revenues increased to $6,301.5 million from $6,292.9 million in the prior-year quarter. The top line also beat the Zacks Consensus Estimate of $5,887 million.

The better-than-expected results were aided by higher refining margin per barrel in the Gulf and West Coasts, and lower costs and expenses. The positives were partially offset by decline in realized refining margin per barrel of throughput in the East Coast and Mid-Continent.

On Feb 1, 2020, the company closed the 157,000-barrel per day Martinez refinery acquisition, which increased total throughput capacity to more than 1 million barrels a day. It is currently the most complex refiner with 12.8 Nelson Complexity.

Segmental Performance

Operating income at the Refining segment was $184.9 million, significantly improving from a loss of $397.7 million a year ago.

The company generated profit of $42.9 million from the Logistics segment, which reflects an improvement from the prior-year quarter’s $38.6 million.

Costs & Expenses

Total costs and expenses in the reported quarter were $6,178.6 million, lower than $6,739.1 million in the year-ago period. Cost of sales — which includes operating expenses, cost of products and others — amounted to $6,066.3 million, lower than the year-ago level of $6,650.8 million.

Throughput Volumes

In the quarter under review, crude oil and feedstocks throughput volumes were 843 thousand barrels per day, flat year over year.

The East Coast, Mid-Continent, Gulf Coast and West Coast regions accounted for roughly 42.3%, 17.8%, 19.9% and 20%, respectively, of the total oil and feedstock throughput volume.

Throughput Margins

Company-wide gross refining margin per barrel of throughput — excluding special items — was recorded at $9.31, lower than the year-earlier quarter’s $10.00.

Refining margin per barrel of throughput was $8.16 in the East Coast, down from $8.55 in the year-earlier quarter. Realized refining margin was $6.05 per barrel in the Gulf Coast, up from $5.83 in the prior-year quarter. The metric was $14.85 per barrel in the West Coast, up from $10.57 a year ago. Also, the metric was $9.42 a barrel in the Mid-Continent, much lower than $17.76 a year ago.

Refinery operating expense per barrel of throughput was $5.28, lower than $5.56 in the year-ago quarter.

Capital Expenditure & Balance Sheet

Through the fourth quarter, the company spent $108.7 million capital on refining operations and $8.5 million on logistics businesses.

At the end of the quarter, it had cash and cash equivalents of $814.9 million, along with total debt of $2,064.9 million, with the debt-to-capitalization ratio being 37%.

Guidance

PBF Energy projects total daily throughput volumes for the March quarter of 2020 from the East Coast in the range of 345,000-365,000 barrels, while the same from the Mid-Continent is anticipated in the band of 95,000-105,000 barrels. Total daily throughput volumes at the Gulf Coast are expected in the range of 165,000-175,000 barrels, while the same from the West Coast is anticipated within 260,000-280,000 barrels.

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 -18.37% due to these changes.

VGM Scores

Currently, PBF Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.