PBF Energy (PBF) and Phillips 66 (PSX) Financial Analysis

PBF Energy (NYSE: PBF) and Phillips 66 (NYSE:PSX) are both mid-cap oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.

Earnings & Valuation

This table compares PBF Energy and Phillips 66’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
PBF Energy $15.92 billion 0.21 $170.81 million $2.09 14.72
Phillips 66 $85.78 billion 0.56 $1.56 billion $3.99 23.39

Phillips 66 has higher revenue and earnings than PBF Energy. PBF Energy is trading at a lower price-to-earnings ratio than Phillips 66, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for PBF Energy and Phillips 66, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PBF Energy 2 7 4 0 2.15
Phillips 66 1 6 8 0 2.47

PBF Energy currently has a consensus price target of $25.50, indicating a potential downside of 17.13%. Phillips 66 has a consensus price target of $91.87, indicating a potential downside of 1.56%. Given Phillips 66’s stronger consensus rating and higher possible upside, analysts plainly believe Phillips 66 is more favorable than PBF Energy.

Profitability

This table compares PBF Energy and Phillips 66’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PBF Energy 1.14% 2.35% 0.78%
Phillips 66 2.11% 7.58% 3.48%

Volatility and Risk

PBF Energy has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Phillips 66 has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

69.8% of Phillips 66 shares are held by institutional investors. 2.6% of PBF Energy shares are held by insiders. Comparatively, 0.5% of Phillips 66 shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

PBF Energy pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. Phillips 66 pays an annual dividend of $2.80 per share and has a dividend yield of 3.0%. PBF Energy pays out 57.4% of its earnings in the form of a dividend. Phillips 66 pays out 70.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. PBF Energy has raised its dividend for 5 consecutive years. PBF Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Phillips 66 beats PBF Energy on 11 of the 17 factors compared between the two stocks.

About PBF Energy

PBF Energy Inc. (PBF Energy) is a holding company. The Company is an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company operates through two segments: Refining and Logistics. It sells its products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States and Canada, and ships products to other international destinations. As of December 31, 2016, it owned and operated five domestic oil refineries and related assets. As of December 31, 2016, its refineries had a combined processing capacity, known as throughput, of approximately 900,000 barrels per day (bpd) and a weighted-average Nelson Complexity Index of approximately 12.2. As of December 31, 2016, the Company owned and operated five refineries providing geographic and market diversity.

About Phillips 66

Phillips 66 is an energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses. The Company operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment gathers, processes, transports and markets natural gas, and transports, stores, fractionates and markets natural gas liquids (NGLs) in the United States. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics. The Refining segment buys, sells and refines crude oil and other feedstocks at refineries in the United States and Europe. The M&S segment purchases for resale and markets refined petroleum products, such as gasolines, distillates and aviation fuels, primarily in the United States and Europe, as well as includes the manufacturing and marketing of specialty products, and power generation operations.

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