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Why PBF Energy (PBF) Is Slipping on Friday

Stocks in this article: PBF

NEW YORK (TheStreet) -- PBF Energy (PBF) is slipping on Friday after pricing its secondary offering of Class A common stock.

By market open, shares had taken off 5.3% to $25.72.

The petroleum refiner announced an underwritten secondary offering of 15 million shares which has been priced for total gross proceeds of around $382.5 million, assuming a price of $25.50 a share.

The shares to be sold are affiliated with funds of First Reserve Management. The firm will receive all proceeds from the offering, which is expected to close around March 26, pursuant to closing conditions.

Citigroup is the sole underwriter of the offering.

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TheStreet Ratings team rates PBF ENERGY INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate PBF ENERGY INC (PBF) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its attractive valuation levels, considering its current price compared to earnings, book value and other measures. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PBF ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PBF ENERGY INC reported lower earnings of $1.35 versus $37.61 in the prior year. This year, the market expects an improvement in earnings ($3.07 versus $1.35).
  • Net operating cash flow has significantly decreased to $148.75 million or 56.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.62%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 93.90% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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