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PBF Energy (PBF) Jumps 149.3% YTD: What's Behind the Rally?

PBF Energy Inc. PBF shares have jumped 149.3% year to date compared with 12.8% growth of the composite stocks belonging to the industry.

The Zacks Rank #1 (Strong Buy) stock, with a market cap of $3.6 billion, has witnessed upward estimate revisions for 2022 and 2023 earnings in the past 30 days.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Let’s delve into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

With most energy companies highly dependent on commodity prices, the recent drop in crude prices has put downward pressure on the sector components. However, the downstream companies have been backed by a remarkable improvement in refined product consumption on the back of increasing vaccinations and mobility.

PBF Energy is well-positioned to capitalize on the mounting fuel demand, as it is one of the leading petroleum refiners in North America, with an overall Nelson Complexity Index reading of 13.2. PBF is a prominent name in the United States for supplying heating oil, unbranded transportation fuels, lubricants, petrochemical feedstock and other petroleum products.

In 2021, the refiner’s crude oil and feedstocks throughput volumes were 834.5 thousand barrels per day (bpd), higher than 727.7 thousand bpd reported a year ago. Moreover, it expects total throughput volumes of 895-955 thousand bpd this year. This is expected to aid the company’s profits and revenues.

With a view to diversifying its income source, PBF Energy is advancing the renewable fuel production project at the Chalmette refinery, which is designed for 20,000-barrels-per-day renewable fuel capacity. PBF is expecting to begin production in the first half of 2023.

PBF Energy is also focused on strengthening its balance sheet. Over the past year and a half, PBF has reduced consolidated debt by more than $2.6 billion.

Other Key Picks

Investors interested in the energy sector might look at the following companies that also presently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cactus Inc. WHD is involved in manufacturing, designing and selling wellhead and pressure-control equipment. At the second-quarter end, Cactus had cash and cash equivalents of $311.7 million, which can provide it with immense financial flexibility. WHD has a strong balance sheet. It revealed that it has no bank debt outstanding as of Jun 30, 2022.

Cactus has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. The company beat the Zacks Consensus Estimate for earnings in the prior four quarters, delivering an earnings surprise of 12.7%. WHD is expected to see earnings growth of 143% in 2022.

Chevron Corporation CVX is one of the largest publicly traded oil and gas companies in the world. Chevron recently raised its quarterly dividend by 6% to $1.42 per share (or $5.68 per share annualized) and promised $5-$15 billion worth of buybacks each year.

Chevron has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. The company currently has a Zacks Style Score of B for Value and A for Growth. CVX is expected to see earnings growth of 126% in 2022.

Range Resources Corporation RRC is among the top 10 natural gas producers in the United States. RRC’s board of directors authorized a $500-million share repurchase program, which is likely to be funded with the company’s free cash flow.

Range Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth and Momentum, and B for Value. RRC is expected to see earnings growth of 171.8% in 2022.


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