Oil and gas prices are susceptible to economic and geopolitical conditions. And any shift in supply or demand can affect the price we pay at the pump for our daily consumption.
The plunging prices of oil and gas are driven by falling demand amid fears of a global recession, lockdowns in China, and the effects of soaring interest rates in the United States. Amid the slumping prices, OPEC plus announced its plans to opt against cutting production further.
However, a tight supply is likely to drive prices higher. Jeff Currie, head of commodities research at Goldman Sachs, anticipates crude oil prices to rise $115 a barrel by April 2023.
In addition, the sector’s outperformance this year might sustain since companies have redirected a significant amount of cash flow back to paying down debt, returning cash to shareholders in the form of dividends and share repurchases, therefore improving their financial health.
PBF Energy Inc. (PBF)
PBF is a petroleum refiner and supplier of gasoline, diesel fuel, jet fuel, unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants, and other petroleum products. The company operates through two segments: Refining; and Logistics.
On November 30, 2022, PBF and PBF Logistics LP (PBFX) announced the completion of the previously announced agreement and plan of merger to acquire all the outstanding common units representing limited partner interests of PBFX for a combination of 0.270 of a share of PBF Energy Class A common stock and $9.25 in cash, without interest, per PBFX Public Common Unit. The combined company is expected to benefit.
For the third quarter, which ended September 30, 2022, PBF’s revenues increased 77.6% year-over-year to $12.76 billion. Its income from operations rose 1,287.5% from its year-ago value to $1.40 billion.
The company’s adjusted net income increased 1,684.1% year-over-year to $1.06 billion, while its EPS grew 1,614.3% from the prior-year quarter to $8.40. Also, its adjusted EBITDA grew substantially from the year-ago value to $1.54 billion.
Analysts expect PBF’s revenues to increase 23% year-over-year to $10.14 billion in its fiscal fourth quarter (ending December 31, 2022). Its EPS is expected to increase 355.1% year-over-year to $5.83 in the current quarter. It has surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of PBF have gained 175.9% year-to-date to close the last trading session at $35.78.
PBF’s POWR Ratings reflect this promising outlook. The stock’s overall B rating translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Growth, Value, and Momentum and a B for Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #7 of 91 stocks. To see additional POWR Ratings for PBF of Stability and Sentiment, click here.
Adams Resources & Energy, Inc. (AE)
AE is engaged in the marketing, transportation, terminalling, and storing various crude oil and natural gas basins in the United States. The company operates through three segments: Crude Oil Marketing, Transportation, and Storage; Tank truck Transportation of Liquid Chemicals, Pressurized Gases, Asphalt and Dry Bulk; and Pipeline Transportation, Terminalling, and Storage of Crude Oil.
On November 1, 2022, the company announced a repurchase of all its shares owned by KSA Industries, Inc., its largest stockholder. With this transaction, AE made significant returns to its existing shareholders and increased the intrinsic value of their stake in the company.
On August 15, 2022, AE’s subsidiary GulfMark Asset Holdings, Inc. acquired Firebird Bulk Carriers, Inc. and Phoenix Oil, Inc. for approximately $33 million. AE’s CEO and President, Kevin Roycraft, said, “This acquisition will be immediately accretive to earnings and cash flow. We expect these companies to increase our annual adjusted cash flow by over 30% while diversifying GulfMark’s service offerings to our customers.”
AE’s total revenues increased 50.1% year-over-year to $852.90 million for the third quarter ended September 30, 2022. Its operating earnings grew 30.2% from its prior-year quarter to $2.99 million, while its net earnings grew 41.6% from its year-ago value to $2.19 million. The company’s EPS improved 38.9% from its year-ago value of $0.50.
The consensus EPS estimate of $3.37 for fiscal 2022 ending December 31, 2022, represents a 22.5% improvement year-over-year. The revenue estimate for the same period is expected to amount to $3.46 billion. The stock has gained 41.2% year-to-date to close the last trading session at $39.27.
AE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It also has an A grade for Momentum and Sentiment and a B grade for Value and Quality. Within the same industry, it is ranked #3. Click here to see the other ratings of AE for Growth and Stability.
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PBF shares were trading at $36.50 per share on Tuesday morning, up $0.72 (+2.01%). Year-to-date, PBF has gained 182.67%, versus a -13.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
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