A month has gone by since the last earnings report for Western Refining, Inc. . Shares have lost about 3.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Results
Western Refining reported fourth-quarter 2016 results, wherein the company incurred a loss of $0.07 as against the Zacks Consensus Estimate of earnings of $0.08. Moreover, the bottom line suffered a decline from the year-ago adjusted earnings of $0.56 per share.
The loss is mainly attributable to lower gross margins and increased operating expenses.
Quarterly net sales of $2,115 million also missed the Zacks Consensus Estimate of $2,197 million. However, the revenue in the reported quarter increased by 2.1% when compared with the year-ago quarter.
Refining Segment: Analysis
Throughput: Total refining throughput averaged 252,063 barrels per day (Bbl/d) compared with 255,847 Bbl/d in the year-ago quarter. Throughput volumes at the El Paso refinery rose 10.5% year over year to 141,307 Bbl/d. The Gallup unit recorded throughput volumes of 25,295 Bbl/d, down 1.2% from the year-ago level. St. Paul Park Refinery unit generated throughput volumes of 85,461 Bbl/d, down 16.5% from the year-ago period.
Refining Margins: Gross refining margin recorded a year-over-year decline to $8.06 per barrel from $13.13. Geographically, refining margin rose 10.6% to $10.57 per barrel at El Paso and decreased nearly 15.9% to $11.45 per barrel at Gallup. The refining margin witnessed a huge decline of 61% to $5.54 per barrel at St. Paul Park Refinery. This major decline was due to the lower realized prices for gasoline and asphalt, fees associated with logistic assets and turnaround of St.Paul Park Refinery.
Operating Expenses: Direct operating expenses at El Paso averaged $3.86 per barrel, down 8.5% year over year. Direct operating expenses at Gallup increased about 38.5% year over year to $11.91 per barrel. Direct operating expenses at St Paul Park Refinery went up by 29.6% year over year to $5.34 per barrel. Combined direct operating expenses at Western Refining units were $5.46 per barrel in the three months ended Dec 31, 2016 compared with $4.94 per barrel in the year-ago period.
Capital Expenditure & Balance Sheet
El Paso, TX-based Western Refining’s total capital spending during the quarter was $65.9 million as compared with $94.9 million in fourth-quarter 2015, reflecting a decline of 30.5%. As of Dec 31, 2016, Western Refining had cash and cash equivalents of $268.5 million and total debt of approximately $1,936.4 million. This represents a debt-to-capitalization ratio of 45.7%.
Outlook
Western Refining has its capital expenditure budget for 2017 at $266 million with $146 million set aside for discretionary spending for logistics projects and El Paso expansion. The company is optimistic about its pending Tesoro Corp. (TSO - Research Report) transaction and aims to mitigate its costs and attain operational efficiency in the coming quarters.
Total refining throughput for El Paso is expected to lie within the range of 128-132 thousand barrels per day (mbpd) for the first quarter 2017. Expected refinery throughput for Gallup and St Paul Park is 26-28 mbpd and 101-105 mbpd for the first quarter 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 19.1% due to these changes.
VGM Scores
At this time, Western Refining's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Western Refining (WNR) Down 3.2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Western Refining, Inc. . Shares have lost about 3.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Results
Western Refining reported fourth-quarter 2016 results, wherein the company incurred a loss of $0.07 as against the Zacks Consensus Estimate of earnings of $0.08. Moreover, the bottom line suffered a decline from the year-ago adjusted earnings of $0.56 per share.
The loss is mainly attributable to lower gross margins and increased operating expenses.
Quarterly net sales of $2,115 million also missed the Zacks Consensus Estimate of $2,197 million. However, the revenue in the reported quarter increased by 2.1% when compared with the year-ago quarter.
Refining Segment: Analysis
Throughput: Total refining throughput averaged 252,063 barrels per day (Bbl/d) compared with 255,847 Bbl/d in the year-ago quarter. Throughput volumes at the El Paso refinery rose 10.5% year over year to 141,307 Bbl/d. The Gallup unit recorded throughput volumes of 25,295 Bbl/d, down 1.2% from the year-ago level. St. Paul Park Refinery unit generated throughput volumes of 85,461 Bbl/d, down 16.5% from the year-ago period.
Refining Margins: Gross refining margin recorded a year-over-year decline to $8.06 per barrel from $13.13. Geographically, refining margin rose 10.6% to $10.57 per barrel at El Paso and decreased nearly 15.9% to $11.45 per barrel at Gallup. The refining margin witnessed a huge decline of 61% to $5.54 per barrel at St. Paul Park Refinery. This major decline was due to the lower realized prices for gasoline and asphalt, fees associated with logistic assets and turnaround of St.Paul Park Refinery.
Operating Expenses: Direct operating expenses at El Paso averaged $3.86 per barrel, down 8.5% year over year. Direct operating expenses at Gallup increased about 38.5% year over year to $11.91 per barrel. Direct operating expenses at St Paul Park Refinery went up by 29.6% year over year to $5.34 per barrel. Combined direct operating expenses at Western Refining units were $5.46 per barrel in the three months ended Dec 31, 2016 compared with $4.94 per barrel in the year-ago period.
Capital Expenditure & Balance Sheet
El Paso, TX-based Western Refining’s total capital spending during the quarter was $65.9 million as compared with $94.9 million in fourth-quarter 2015, reflecting a decline of 30.5%. As of Dec 31, 2016, Western Refining had cash and cash equivalents of $268.5 million and total debt of approximately $1,936.4 million. This represents a debt-to-capitalization ratio of 45.7%.
Outlook
Western Refining has its capital expenditure budget for 2017 at $266 million with $146 million set aside for discretionary spending for logistics projects and El Paso expansion. The company is optimistic about its pending Tesoro Corp. (TSO - Research Report) transaction and aims to mitigate its costs and attain operational efficiency in the coming quarters.
Total refining throughput for El Paso is expected to lie within the range of 128-132 thousand barrels per day (mbpd) for the first quarter 2017. Expected refinery throughput for Gallup and St Paul Park is 26-28 mbpd and 101-105 mbpd for the first quarter 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 19.1% due to these changes.
Western Refining, Inc. Price and Consensus
Western Refining, Inc. Price and Consensus | Western Refining, Inc. Quote
VGM Scores
At this time, Western Refining's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.