NEW YORK (TheStreet) -- Shares of PBF Energy (PBF) - Get Report were gaining 8% to $30.50 after-hours on Wednesday after the announcement that the oil refinery company will purchase the Torrance refinery in Southern California from Exxon Mobil (XOM) - Get Report .
PBF Energy will pay $537.5 million plus working capital to be valued at closing for the refinery and related logistics assets. The company said it will pay for the refinery with a combination of cash, debt, and equity.
The sale is expected to close in the second quarter of 2016.
The refinery was closed in February after an explosion injured four contractors and damaged the facility. The refinery will be restored to full working condition before the acquisition closes.
PBF Energy said the refinery will increased its total throughput to about 900,000 barrels of oil a day. When operating the Torrence refinery can produce up to 155,000 barrels a day.
TheStreet Ratings team rates PBF ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings 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. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 548.0% when compared to the same quarter one year prior, rising from $20.96 million to $135.81 million.
- Net operating cash flow has significantly increased by 295.91% to $185.17 million when compared to the same quarter last year. In addition, PBF ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -19.71%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for PBF ENERGY INC is currently extremely low, coming in at 7.18%. Regardless of PBF's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.82% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PBF ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: PBF