NEW YORK (TheStreet) --Shares of Tesoro (TSO) finished higher by 2.69% to $59.94 this afternoon as the oil refinery industry rebounded from losses it suffered on Wednesday after the Obama administration granted only two U.S. energy companies permission to export condensate to foreign buyers.
After the administration told Pioneer Natural Resources (PXD) - Get Pioneer Natural Resources Company Report and Enterprise Products Partners LP (EPD) - Get Enterprise Products Partners L.P. Report they are allowed to sell the ultralight oil that buyers could convert into jet fuel, diesel, and gasoline, investors began a selloff in which Valero Energy (VLO) - Get Valero Energy Corporation Report, Marathon Petroleum (MPC) - Get Marathon Petroleum Corporation Report, Holly Frontier (HFC) - Get HollyFrontier Corporation Report and other refinery stocks took a dive.
Analysts at Cowen Group (COWN) - Get Cowen Inc Class A Report say the selloff was an overreaction and "the spirit of the law - that hydrocarbon liquids produced in the U.S. must be processed in the U.S. - remains in place, and permits for condensate exports do not constitute precedent for crude oil...We continue to see potential for a meaningful feedstock advantage for U.S. refiners emerging later in 2014."
Separately, TheStreet Ratings team rates TESORO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESORO CORP (TSO) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 35.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- TESORO CORP's earnings per share declined by 13.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TESORO CORP reported lower earnings of $2.83 versus $6.20 in the prior year. This year, the market expects an improvement in earnings ($5.40 versus $2.83).
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 16.1% when compared to the same quarter one year ago, dropping from $93.00 million to $78.00 million.
- You can view the full analysis from the report here: TSO Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.