- Wondering if PBF Energy at around US$43 is still offering value after a strong run, or if most of the opportunity has already been priced in.
- The stock has been volatile recently, with a 6.6% decline over the last 7 days, a 12.9% gain over 30 days, a 50.8% return year to date, and a 172.6% return over the past year.
- Recent news around refining margins, fuel demand trends, or sector wide sentiment has been helping shape expectations for refiners like PBF Energy. These headlines often influence how investors think about future cash flows and what they are willing to pay for each dollar of earnings or revenue.
- Right now PBF Energy has a valuation score of 4 out of 6. This suggests that several checks indicate the stock may be undervalued. The rest of this article will break that down using different valuation approaches and will also hint at an even more complete way to think about value at the end.
Approach 1: PBF Energy Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes projected future cash flows, then discounts them back to today to estimate what the business might be worth right now. For PBF Energy, the model used is a 2 Stage Free Cash Flow to Equity approach.
The latest twelve month free cash flow is a loss of $589.04 million, which is an important starting point because it shows recent cash generation has been pressured. Analysts and internal estimates then project free cash flow turning positive, with forecast free cash flow of $657.33 million in 2026 and $452.00 million in 2027. Beyond that, Simply Wall St extrapolates out to 2035, with projected free cash flows gradually stepping down towards around the mid $200 million range in later years.
When all of those projected cash flows are discounted back to today, the estimated intrinsic value comes out at about $51.73 per share. That compares to the current share price around $43, which implies the stock is about 16.8% undervalued according to this DCF model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests PBF Energy is undervalued by 16.8%. Track this in your watchlist or portfolio, or discover 63 more high quality undervalued stocks.
Approach 2: PBF Energy Price vs Sales
For companies where earnings can swing around, P/S is often a useful cross check because it compares the share price to revenue, which tends to be more stable than earnings. Investors usually pay a higher or lower P/S depending on what they expect for future growth and how much risk they see in the business, so there is no single “right” multiple that fits every stock.
PBF Energy currently trades on a P/S of 0.17x, compared with the Oil and Gas industry average of 2.03x and a peer group average of 0.36x. Simply Wall St also estimates a Fair Ratio of 0.56x for PBF Energy. This Fair Ratio is a proprietary view of what the P/S could be given factors such as earnings growth, profit margins, industry, market cap and company specific risks, which makes it more tailored than a simple comparison with peers or the broad industry.
With the current 0.17x P/S sitting below the 0.56x Fair Ratio, the stock screens as undervalued on this measure.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your PBF Energy Narrative
Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in, giving you a simple way to put your own story about PBF Energy on top of the numbers by linking your view of future revenue, earnings and margins to a forecast, and then to a Fair Value that can be compared with the current share price.
On Simply Wall St, Narratives sit in the Community page and are used by millions of investors as an accessible tool that ties a company story directly to a financial model. This means you can see in one place how your assumptions about issues like West Coast refining margins, renewables exposure or long term fuel demand translate into a Fair Value that may suggest the shares are expensive, cheap or roughly in line with your view.
For PBF Energy, for example, one investor might lean toward a higher Fair Value around US$59.94 based on expectations for factors such as Martinez ramp up, cost savings and tighter fuel markets. Another investor might anchor on a lower Fair Value near US$22 that reflects concerns around regulation, decarbonization and margin risk. As news or earnings arrive, these Narratives can be updated automatically so your decision making stays aligned with the latest information.
For PBF Energy however, we will make it really easy for you with previews of two leading PBF Energy Narratives:
Fair value in this bullish narrative: US$59.94 per share.
At the last close of US$43.03, that implies the shares are about 28.2% below this fair value.
Revenue growth assumption: 7.81% a year.
- Expects tight fuel markets and refinery closures to support premium pricing for PBF's West Coast and other assets.
- Assumes the Refining Business Improvement program and renewable fuels investments support higher net margins over time.
- Uses higher revenue and earnings assumptions combined with a future P/E of 18.2x to arrive at a US$59.94 fair value.
Fair value in this more cautious narrative: US$36.62 per share.
At the last close of US$43.03, that implies the shares are about 17.5% above this fair value.
Revenue growth assumption: 2.76% a year.
- Sees higher oil price assumptions and crude trade shifts as helpful, but not enough to offset long term demand and regulatory pressures.
- Highlights operational, environmental and capex risks at older refineries that could weigh on margins and free cash flow.
- Applies more modest growth and profitability assumptions with a future P/E of 13.4x to reach a US$36.62 fair value estimate.
If you want to go beyond these previews and see how other investors are framing the same facts into different outcomes for PBF Energy, See what the community is saying about PBF Energy.
Do you think there's more to the story for PBF Energy? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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