On Apr 17, Zacks Investment Research downgraded energy
Western Refining Inc.
), to a Zacks Rank #3 (Hold).
GLOBAL PARTNERS (GLP): Free Stock Analysis
LEHIGH GAS PTNR (LGP): Free Stock Analysis
INERGY LP (NRGY): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis
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Why the Downgrade?
Western Refining is an independent refiner and marketer of
refined petroleum products in the Southwestern and Mid-Atlantic
regions of the U.S. As per our opinion, in terms of geographic
diversification, the lack of exposure of the company to the other
refining regions in the country weakens its competitive
Besides that, Western Refining being a buyer of crude, its
profitability might get affected due to the increase in oil
prices. As a result, with the commodity's price hovering around
$90 per barrel, we expect Western Refining's margins to be
negatively impacted due to a rise in the cost of oil it buys to
make gas, jet fuel and other refined products.
Western Refining, one the largest independent oil refiners in the
U.S., has an easy access to the West Texas Intermediate (WTI)
crude. WTI is light and of very high quality. As the major
portion of the company's refining capacity uses light/sweet crude
oil as feedstock, the company is unable to take advantage of the
attractive crude quality spreads, which is the price differential
between the low-cost heavy/sour and the higher-priced light/sweet
grades of crude oil.
Based on these negatives, the Zacks Consensus Estimate for
first-quarter 2013 has decreased by 15.1% to $1.01 per share over
the last 60 days. For 2013, most of the estimates (6 out of 10)
were revised downward over the same time frame, sinking the Zacks
Consensus Estimate by 5.4% to $4.54 per share.
Stocks to Consider
Three oil refining and marketing firms that are expected to
outperform the U.S. equity markets in the next one to three
Global Partners LP
Lehigh Gas Partners LP
). All three stocks carry a Zacks Rank #2 (Buy).