On Jan 2, Zacks Investment Research upgraded oil refiner and marketer, Western Refining Inc. ( WNR ) to a Zacks Rank #2 (Buy).WILLIAMS(C)ENGY (CWEI): Free Stock Analysis ReportHARVEST NATURAL (HNR): Free Stock Analysis ReportTRANSOCEAN LTD (RIG): Free Stock Analysis ReportWESTERN REFING (WNR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research
Why the Upgrade?
Western Refining is one the largest independent oil refiners in the U.S. A major advantage for the company is its proprietary access to pipelines, which inhibits lower-cost competitors from supplying Western Refining's key markets.
We continue to like the company for its shareholder friendly financial policy, considerable success in reducing debt and the initiatives to improve reliability/reduce operating costs. As a strategic move to improve performance, Western Refining consolidated the operations of its Four Corners refineries (Bloomfield and Gallup) into one at the Gallup refinery and has shutdown its Yorktown refining operations. Also, the company sold its Yorktown, Virginia refinery, which not only helped the firm to monetize the assets but also exit the volatile East Coast refining market. Other positives for the firm include its strong retail and wholesale operations.
Despite a disappointing third quarter result, we are hopeful for the coming quarter amid positive revision in consensus estimates. 5 estimates have gone higher for Western Refining against just 2 moving lower in the past 60 days, with estimates increasing 30% to 52 cents per share from 40 cents. Moreover, for the current year, 4 estimates have gone up against just 2 moving down, with the Consensus estimate rising 3.0% from $2.96 to $3.05 per share, in the same time frame. The stock has also moved up almost 8.5% in the past one month.
Other aspects for Western Refining are also looking good. The company has a forward PE of 13.9, lower than its peer group level of 15.1 and also has a decent dividend yield of 2.08%.
Other Stocks That Warrant a Look
Apart from Western Refining, one can also consider other better-ranked players in the oil and gas exploration and production sector like Harvest Natural Resources Inc. ( HNR ), Transocean Ltd. ( RIG ) and Clayton Williams Energy Inc. ( CWEI ). All the stocks sport a Zacks Rank #1 (Strong Buy).