Is PBF Energy (PBF) a Solid Growth Stock? 3 Reasons to Think " Yes "
PBF Energy (PBF) could produce exceptional returns because of its solid growth attributes.
Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a growth stock that can live up to its true potential can be a tough task.
That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.
However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.
Our proprietary system currently recommends PBF Energy (PBF) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.
Here are three of the most important factors that make the stock of this refiner a great growth pick right now.
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for PBF Energy is 110.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 61.6% this year, crushing the industry average, which calls for EPS growth of 55.9%.
Impressive Asset Utilization Ratio
Growth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.
Right now, PBF Energy has an S/TA ratio of 1.76, which means that the company gets $1.76 in sales for each dollar in assets. Comparing this to the industry average of 1.36, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And PBF Energy looks attractive from a sales growth perspective as well. The company's sales are expected to grow 61.9% this year versus the industry average of 46.2%.
Promising Earnings Estimate Revisions
Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
There have been upward revisions in current-year earnings estimates for PBF Energy. The Zacks Consensus Estimate for the current year has surged 14.7% over the past month.
While the overall earnings estimate revisions have made PBF Energy a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.
This combination positions PBF Energy well for outperformance, so growth investors may want to bet on it.
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PBF Energy Inc. (PBF): Free Stock Analysis Report
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