Geopolitical issues disrupted the supply of crude oil and gas, leading to a significant rise in energy prices last year. Energy prices increased by 7.3% in the fiscal year 2022. However, energy prices declined 4.5% sequentially in December.
The energy sector significantly outperformed the overall market in 2022. While energy prices have declined from their highs, demand has remained steady. With the European Union imposing a price cap on Russian oil and restricting refined oil imports starting from February 5, supply is expected to remain tight.
Furthermore, with China reopening its economy, the demand for crude oil and natural gas is expected to increase. Investors’ interest in energy stocks can be gauged from the Energy Select Sector SPDR ETF’s (XLE) 29.1% gains over the past year, compared to the S&P 500’s 7.4% decline.
Amid this backdrop, it could be wise to invest in fundamentally strong and fast-growing energy stocks HF Sinclair Corporation (DINO) and PBF Energy Inc. (PBF).
HF Sinclair Corporation (DINO)
DINO operates as an independent energy company. It produces and markets gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals, specialty and modified asphalt, and others.
In terms of forward non-GAAP P/E, DINO’s 3.65x is 54.9% lower than the 8.09x industry average. Likewise, its 3.27x forward EV/EBIT is 58.2% lower than the 7.83x industry average.
DINO’s revenue grew at a CAGR of 25.9% over the past three years. Its EBIT increased at a CAGR of 32.9% over the past three years. In addition, its EPS grew at a CAGR of 33% over the same period.
For the fiscal third quarter that ended September 30, 2022, DINO’s sales and other revenues increased 126.2% year-over-year to $10.60 billion. Net income attributable to DINO stockholders increased 239.9% year-over-year to $954.41 million.
Moreover, its adjusted EBITDA increased 267.9% year-over-year to $1.50 billion, while EPS attributable to DINO stockholders came in at $4.45, representing a 160.2% increase from the prior-year quarter.
Analysts expect DINO’s EPS for the quarter ending March 31, 2023, to increase 109.7% year-over-year to $2.08. Its revenue for the quarter that ended December 31, 2022, is expected to increase 56.9% year-over-year to $8.82 billion.
It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 43.7% over the past nine months to close the last trading session at $54.65.
DINO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the B-rated Energy - Oil & Gas industry, it is ranked #12 out of 93 stocks. It has an A grade for Growth and Momentum and a B for Quality.
We have also given DINO grades for Value, Stability, and Sentiment. Get all DINO ratings here.
PBF Energy Inc. (PBF)
PBF engages in refining and supplying petroleum products. The company operates in two segments, Refining and Logistics. It produces gasoline, ultra-low-sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, and other petroleum products.
In terms of forward non-GAAP PEG, PBF’s 0.02x is 96.4% lower than the 0.66x industry average. Likewise, its 1.50x forward EV/EBITDA is 72.8% lower than the 5.53x industry average.
PBF’s revenue grew at a CAGR of 21.8% over the past three years. Its EBIT increased at a CAGR of 102.3% over the past three years.
On November 30, 2022, PBF completed the PBF Logistics LP (PBFX) acquisition. PBF and PBFX Chairman and CEO Tom Nimbley expressed his thanks to unitholders and looked forward to the continued success of the combined company. The combined company should help achieve an enhanced financial profile.
PBF’s revenues for the third quarter that ended September 30, 2022, increased 77.6% year-over-year to $12.76 billion. The company’s adjusted fully-converted net income increased significantly year-over-year to $1.06 billion.
In addition, its adjusted EPS increased significantly from the prior-year quarter to $7.96. Also, its adjusted EBITDA rose considerably year-over-year to $1.54 billion.
Analysts expect PBF’s EPS and revenue for the quarter that ended December 31, 2022, to increase 285.3% and 19.5% year-over-year to $4.93 and $9.85 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 38.3% to close the last trading session at $40.20.
PBF’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, translating to Buy in our proprietary rating system. It is ranked #6 in the same industry. In addition, it has an A grade for Growth, Value, and Momentum and a B for Quality.
To see the other ratings of PBF for Stability and Sentiment, click here.
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DINO shares were trading at $54.03 per share on Thursday afternoon, down $0.62 (-1.13%). Year-to-date, DINO has gained 4.12%, versus a 9.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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