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PBF Energy’s Earnings to Fall the Most among Peers

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Jun. 20 2019, Updated 11:12 a.m. ET

PBF’s earnings estimate

PBF Energy’s (PBF) earnings are estimated to fall by 49% to $1.7 in 2019, which is the highest estimated fall in earnings compared to peers. Delek US Holdings (DK), Valero Energy (VLO), and Marathon Petroleum (MPC) are estimated to post 4%, 10%, and 21% falls in earnings in 2019, respectively. HollyFrontier (HFC) and Phillips 66’s (PSX) earnings could fall by 30% and 37%, respectively, in the year.

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Also, PBF Energy’s EPS are expected to fall by 22% YoY to $1.1 in Q2 2019. Analysts expect the company’s earnings to fall likely due to weaker oil spreads expectations. In the first quarter earnings conference call, Thomas Nimbley stated that the narrow light heavy differential is a challenging area for them.

Further, PBF’s financial position is weak due to high debt in its capital structure and a tighter cash flow position. PBF Energy’s total debt to total capital ratio stood at 39% in Q1, above the peer average of 36%. Also, in the quarter, the company’s cash flow could not cover essential expenses like capex and dividends. The company’s operating cash flows stood at -$150 million and capex and dividend outflows stood at $238 million and $36 million, respectively.

Valuations and dividends

PBF Energy trades at a forward PE of 7.9x, below the peer average of 8.5x. PBF’s lower valuations are due to its dull financial position.

Further, PBF Energy’s dividend yield stands at 4.9%, above the peer average of 4.1%. In the current quarter, PBF paid a dividend of $0.3 per share, which stood stable year-over-year.

Overall, PBF’s earnings could plunge the most among peers in 2019. Also, the company’s financials are weak with higher debt and tighter cash flow position.

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