Watch Out: Barbarians At The Gate For PBF Energy (PBF)

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.

Trade-Ideas LLC identified PBF Energy ( PBF) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified PBF Energy as such a stock due to the following factors:

  • PBF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.6 million.
  • PBF has traded 311,687 shares today.
  • PBF traded in a range 744.4% of the normal price range with a price range of $5.41.
  • PBF traded above its daily resistance level (quality: 71 days, meaning that the stock is crossing a resistance level set by the last 71 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PBF:

PBF Energy Inc., together with its subsidiaries, engages in the refining and supply of petroleum products. The stock currently has a dividend yield of 4.6%. Currently there are 3 analysts that rate PBF Energy a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for PBF Energy has been 1.5 million shares per day over the past 30 days. PBF Energy has a market cap of $2.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.35 and a short float of 5% with 3.18 days to cover. Shares are down 1.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates PBF Energy as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • 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 12.8% when compared to the same quarter one year prior, going from $77.44 million to $87.32 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PBF's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 36.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of PBF ENERGY INC has not done very well: it is down 12.84% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PBF ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.

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