Western Refining Inc.
) are trading near their 52-week high of $37.64. In fact, the El
Paso, Texas-headquartered independent oil refiner and marketer
has seen its stock price climb some 25% since the beginning of
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WESTERN REFING (WNR): Free Stock Analysis
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Despite this price appreciation, we remain optimistic on the
firm's near-term prospects, supported by consistency in its
earnings/cash flows, attractive fundamentals and a positive
outlook. These factors are reflected in Western Refining's Zacks
Rank #2 (Buy), implying that it is expected to outperform the
broader U.S. equity market over the next one to three months.
Why the Bullishness?
Western Refining is one the largest independent oil refiners in
the U.S. with a combined crude oil processing capacity of
approximately 151,000 barrels per day. A major advantage for the
company is its proprietary access to pipelines, which inhibits
lower-cost competitors from supplying Western Refining's key
In particular, Western Refining's easy access to the lower-priced
West Texas Intermediate (WTI) crude gives a cost advantage that
is reflected in the company's high gross margins vis-à-vis its
Western Refining has recently hiked its quarterly dividend payout
by 50% to 12 cents per share (48 cents per share annualized). We
believe that the hike in dividend not only highlights Western
Refining's commitment to create value for shareholders but also
underlines the company's confidence in its future earnings
Further, we believe that the company has done a very impressive
job at reducing its leverage. Having made debt reduction a
priority - which reflects a supportive financial policy - Western
Refining management was able to trim total debt by more than $550
million during the last four quarters.
In the near term, the company stands to benefit from its exposure
to the profitable Southwest refining assets. Western Refining's
strong retail and wholesale operations strengthen the positive
Other Stocks to Consider
In addition to Western Refining, there are certain other
downstream operators like
Calumet Specialty Products Partners L.P.
Global Partners L.P.
NGL Energy Partners L.P.
) that offer even greater value and are worth buying now. All
these firms sport a Zacks Rank #1 (Strong Buy).