We came across a bullish thesis on PBF Energy Inc. (PBF) on The Chop Wood, Carry Water Newsletter’s Substack by Alexandru Dragut. In this article, we will summarize the bulls’ thesis on PBF. PBF Energy Inc. share was trading at $33.20 as of Oct 10th. PBF’s trailing and forward P/E were 5.37 and 16.61 respectively according to Yahoo Finance.
An aerial view of an oil refinery, showing the production of refined petroleum products.
PBF Energy Inc. is a leading independent petroleum refiner in the U.S., operating six major refineries across the country. The company produces and sells transportation fuels, heating oils, lubricants, and petrochemical feedstocks, with a strong presence in the U.S., Canada, and Mexico. PBF generates revenue through its refining operations, processing over 1 million barrels of crude oil per day. Its products are sold to wholesalers, retailers, and transportation companies. With refineries positioned across key regions—the East Coast, Gulf Coast, Midwest, and West Coast—PBF benefits from diverse crude sourcing and widespread market access. Additionally, the company provides transportation and storage services through its pipelines and terminals.
Investing in PBF Energy offers a compelling opportunity due to its strategic geographic footprint and robust refining capacity. Despite a revenue decline to $38.3 billion in 2023, PBF demonstrated resilience by effectively managing costs, reducing operating expenses from $42.1 billion to $35.9 billion. The company maintains a strong free cash flow, with $868 million generated in the past year, supported by prudent capital expenditures.
PBF’s ongoing investment in renewable energy, specifically through its 50% ownership of a renewable diesel facility with Eni, positions it to meet growing demand for low-carbon fuels. This strategic pivot aligns with renewable fuel mandates and enhances PBF’s long-term growth prospects, particularly as environmental regulations tighten. On the financial front, PBF remains stable with a debt-to-equity ratio that reflects improved fiscal health. It holds $1.37 billion in cash and $2.07 billion in debt, resulting in a net cash position of -$698 million. Despite this, PBF raised its quarterly dividend by 25% in 2023, coupled with $590 million in share repurchases, highlighting the company’s commitment to shareholder returns. With a potential share price of $48 to $51 valuation-wise, PBF trades at a price-to-book ratio of 0.59, suggesting it is undervalued compared to its peers.
PBF Energy Inc. is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held PBF at the end of the second quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of PBF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PBF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.