) announced the pricing of senior notes worth $300 million. The
notes, carrying an interest rate of 5.125%, are expected to
mature in 2024. Tesoro Corp. expects the offering to close on Mar
The company plans to use the funds generated from this offering,
along with the cash on hand, to redeem an earlier offering. The
earlier offered senior notes, due 2019, carried an interest rate
of 9.75% and were worth $300 million as of Dec 31, 2013. Tesoro
Corp. announced that it has released a redemption notice for the
2019 notes but the redemption process is subject to the closing
of this offering.
San Antonio, Texas-based Tesoro Corp. is an independent refiner
and marketer of refined petroleum products in the western U.S. A
major advantage for the company is the scale and diversification
benefits afforded by its portfolio of seven refineries. We also
like Tesoro's solid long-term competitive position on the
supply-constrained California market.
However, the company does not look too good on the earnings
front. It has missed the Zacks Consensus Estimate in two
back-to-back quarters with the most recent quarter reflecting a
massive 86.67% negative surprise. Tesoro Corp. reported fourth
quarter earnings of 4 cents, down 97.1% from the year-ago
adjusted earnings of $1.38 and below the Zacks Consensus Estimate
of 30 cents, due to a significant increase in operating expenses
and sharp drop in refining margins across all operating regions.
Tesoro Corp. currently has a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can consider better-ranked players in the oil
refining and marketing sector like
Marathon Petroleum Corporation
Valero Energy Corp.
Western Refining, Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
MARATHON PETROL (MPC): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis
WESTERN REFING (WNR): Free Stock Analysis
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