PBF Outperforms Industry in 3 Months: How to Play the Stock?

PBF Energy Inc.’s PBF shares have gained 12.9% in the past three months, outperforming the Zacks Oil & Gas- Refining and Marketingindustry’s decline of 0.3%.

Among other stocks from the same sector, Phillips 66 PSX has registered a decline of 5.6%, while Marathon Petroleum MPC has gained 10.4% over the same period.

Is it wise to add the PBF stock to your portfolio solely based on its recent price uptick? Let us explore the broader picture and examine the key factors that can help investors determine whether this is a strategic entry point for the stock.

Factors to Consider

PBF Energy operates a geographically diversified refining network with a total throughput capacity exceeding 1 million barrels per day. The company's average Nelson Complexity Index of 12.8 underscores its ability to process a broad spectrum of crude oil types. This high level of complexity enables the refiner to handle a balanced mix of heavy (33%), medium (35%) and light (19%) crudes, offering enhanced flexibility and optimization of yields — key factors in safeguarding margins across market cycles.

To enhance operational efficiency and drive cost reductions, PBF has launched the Refining Business Improvement Program. This initiative targets specific areas within the refining segment for cost-saving opportunities, with the goal of achieving more than $200 million in run-rate savings by the end of 2025. In a landscape characterized by price volatility, these measures are expected to strengthen the company’s profitability and resilience.

PBF also maintains a well-balanced product output, comprising 45% gasoline, 36% distillate and a mix of other products such as lubricants and chemicals. Its strategically distributed refining operations, spanning the East Coast, Gulf Coast, Mid-Continent and West Coast, help buffer the business from localized demand fluctuations and regulatory shifts, providing a critical hedge in unpredictable energy markets.

The leading upstream energy company has consistently maintained a lower debt-to-capitalization ratio than the industry average over the past several years. As of the end of the March quarter, the company demonstrated solid financial liquidity, holding a cash balance of $0.47 billion, which is adequate to cover its long-term debt obligations of $2.24 billion. This underscores the company’s strong liquidity profile and prudent financial management.

Earnings of PBF Energy are expected to grow 26.6% in the next five years, better than the industry average of 12.7%.

PBF Shares Trade at a Discount

PBF Energy shares are trading at a discount to the industry. Its price-to-book value of 0.48X is lower than the industry average of 1.78X. Shares of other integrated energy companies like Marathon Petroleum are trading at a multiple higher than the industry average, while Phillips 66 is trading at a discount.

Average Target Price for PBF Suggests Downside

Based on short-term price targets offered by 13 analysts, the Zacks average price target is $21.23 per share. The average suggests a 2.53% downside from the last closing price.

Also, PBF Energy’s relatively slow shift toward renewable energy compared with its peers could lead to a loss of market share, especially in rapidly expanding sectors like renewable diesel and hydrogen fuel. Given that renewable sources now fulfill 70% of California’s diesel demand, the company’s minimal presence in this space makes it increasingly susceptible to competitive headwinds.

Hence, it is better to stay cautious about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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