Are PBF Energy (PBR)’s Bearish Ratings Justified?

PBF Energy may be undervalued with strong growth indicators, but the 11 analysts following the company give it an rating of hold. Their target prices range from $8.4 to $19.0 per share, for an average of $13.71. At today's price of $14.16, PBF Energy is trading 3.28% away from its average target price, suggesting there is an analyst consensus of little upside potential for the stock.

Petróleo Brasileiro S.A. - Petrobras explores, produces, and sells oil and gas in Brazil and internationally. Based in Rio De Janeiro, Brazil, the large-cap Energy company has 45,149 full time employees. PBF Energy has offered a 81.1% dividend yield over the last 12 months.

PBF Energy has a trailing twelve month P/E ratio of 2.6, compared to an average of 7.54 for the Energy sector. Considering its EPS guidance of $2.87, the company has a forward P/E ratio of 4.9.

The average compound growth rate of the company's historical and projected earnings per share is 13.0%. On this basis, the company's PEG ratio is 0.17. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 9.2%, which gives us a PEG ratio of 0.24. Even with this more conservative assumption on EPS growth, the PEG ratio suggests that PBF Energy shares are underpriced.

Furthermore, the market is potentially undervaluing PBF Energy in terms of its book value because its P/B ratio is 0.23. In comparison, the sector average P/B ratio is 1.68. The company's shares are currently -76.2% below their Graham number, indicating that its shares have a margin of safety.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $76,589 $53,683 $83,966 $124,474
Gross Margins 40.3% 45.6% 48.6% 52.2%
Operating Margins 26.1% 30.8% 38.6% 44.6%
Net Margins 13.25% 2.13% 23.67% 29.42%
Net Income (MM) $10,151 $1,141 $19,875 $36,623
Net Interest Expense (MM) -6,314 -5,655 -4,644 -2,827
Net Interest Expense (MM) -$6,314 -$5,655 -$4,644 -$2,827
Depreciation & Amort. (MM) -$14,836 -$11,445 -$11,695 -$13,218
Earnings Per Share $1.56 $0.18 $3.04 $5.42
EPS Growth n/a -88.46% 1588.89% 78.29%
Diluted Shares (MM) 6,522 6,522 6,522 6,522
Free Cash Flow (MM) $1,703 $23,016 $31,466 $40,136
Capital Expenditures (MM) -$23,897 -$5,874 -$6,325 -$9,581
Net Current Assets (MM) -$127,713 -$102,746 -$74,387 -$86,105
Current Ratio 0.97 1.04 1.25 1.0
Long Term Debt (MM) $58,791 $49,702 $32,059 $26,378
Net Debt / EBITDA 1.74 2.81 0.69 0.4
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.