PBF Energy: Bullish on Post-Pandemic Recovery

PBF Energy (PBF) reported historically high revenues for Q4 2021 and a higher demand for its refined oil products post pandemic.

PBF Energy is one of the largest oil refinery companies in the United States and operates six large refineries. The company’s stock has been on a one-year uptrend and is currently tempting its 52-week high. I rate the company as bullish.

Current Operations

PBF Energy refines crude oil and sells unbranded fuels, oils, feedstocks, and lubricants. Its products include gasoline, diesel, jet fuel, heating oil, and engine oil.

The company receives crude through various logistics, including pipelines, and has another series of logistics to redistribute the refined products. The company oversees a vast set of logistical assets and has a 47.9% ownership of PBF Logistics (PBFX) as part of its network.

The company owns and operates six refining facilities. On the East Coast, it has a 5,000 acre-site in Delaware City, DE, which has a 180,000 barrels per day capacity.

Nearby, up the Delaware River, the company has a 950 acre-site in Paulsboro, New Jersey, which has a 105,000-barrel per day capacity. In the Midwest, PBF operates a 282 acre-site, which has a 180,000 barrel per day capacity. In New Orleans, the company operates a large facility with a 185K barrel per day capacity.

On the West Coast, in California, the company has two large facilities, one of which produces near 10% of California’s total gasoline usage. Its 700-acre facility in Torrance has a capacity of 166,000 barrels per day and has a history of producing 1.8 billion gallons of gasoline per year.

The company’s other facility in Martinez represents its newest asset. The 860-acre site has the capacity to produce 157,000 barrels per day and is one of the most “complex” refineries in the United States.

The company is looking to diversify its revenue streams in the future and wants to convert some of its facilities to renewable fuels.

Q4 2021 Financial Performance

PBF Energy beat the market consensus on revenue and EPS ($1.28). The company reported $8.244 billion in revenues, representing a 125.55% increase from last year’s same quarter. It reported a gross profit from revenues of $493 million. The company’s net income was $189.1 million compared to a net loss of $286 million last year’s same quarter.

Financial performance for the first half of 2021 for PBF was attributed to pandemic recovery, but the second half brought the company into positive cash flow and historically high revenues. Demand for refined oil products is back to pre-pandemic norms, according to the company’s CEO. Demand should continue to increase post pandemic.

The company reported cash and cash equivalents of $1.341 billion and long-term assets of $11.6 billion. PBF’s long-term liabilities are $9.1 billion. The company is committed to lowering operating costs and bringing down debt.

The company reported 887,000 barrels per day for Q4 2021. It expects between 830,000 to 890,000 barrels per day for Q1 2022.

The current street consensus revenue estimate for Q1 2022 is $7.7 billion. The same synergies from Q4 2021 may not be present on the next report. The company reported a higher net income because of the sale of certain assets and the realization of lower tax liability on the repurchasing of notes.

Stock Performance and Rating

PBF Energy is long down from its all-time high of $50 per share. The company’s stock took a dive at the start of the pandemic and dropped near $5 per share.

The stock price has seen a lot of recovery and uptrend over the last two years. Its one-year stock price performance is 111% and its 6-month performance is 100%.

The stock price is nearing its 52-week high of $20 per share. The company’s stock enjoys a high institutional ownership at 76%.

Wall Street’s Take

Turning to Wall Street, PBF Energy has a Moderate Sell rating based on two Buy, three Hold, and five Sell ratings in the last three months. The average PBF Energy price target of $17.55 implies 1.9% downside potential.

Conclusion

PBF Energy recently reported historically high revenues and indicated an increased demand for refined oil. The company foresees demand continuing to rise through the next physical year.

In the long term, the company plans to diversify its revenue streams by introducing renewable oil facilities. PBF is also committed to bringing down its debt and operating costs.

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