As of yesterday, refining companies Delek US Holdings (DK) and Alon USA Energy (ALJ) were trading 35% and 29%, respectively, below their 100-day moving averages. Delek US Holdings has been in a downtrend since July 2015 after it hit its 2015 highs. The stock formed a double top pattern in July prior to its fall.
Large cap downstream companies are trading 15.4% below their 100-day moving averages. Phillips 66 (PSX) and Tesoro Corporation (TSO) are trading 8.5% and 17.2%, respectively, below their 100-day moving averages. Only PBF Energy (PBF) is trading above its 100-day moving average, but only by 1%. Valero Energy (VLO) is trading 2% below its 100-day moving average.
Wall Street’s consensus estimates
Wall Street’s consensus estimates suggest that the ten major US (SPY) large cap refiners could return 42.2% on average over the next 12 months. The frontline refineries Phillips 66, Valero Energy, Marathon Petroleum, and Tesoro could rise by 27%, 22%, 62%, and 45%, respectively, from their current levels.
By comparison, Delek US Holdings, Alon USA Energy, and CVR Refining could rise by 94%, 50%, and 27%, respectively. In terms of current and forward price-to-earnings ratios, Delek US Holdings, CVR Refining, and HollyFrontier are relatively cheaper than the other downstream companies. The table above shows the moving averages and Wall Street estimates for large cap refiners.
In the next part of this series, we’ll analyze the moving averages of midstream companies.