CVR Energy, Inc. - Momentum

CVR Energy, Inc. (CVI) just blasted into a new multi-year high after reporting a hefty 15% earnings surprise in early March. That sent estimates jumping, providing more upward momentum for this Zacks #1 rank stock.

Company Description

CVR Energy, Inc., together with its subsidiaries, refines and markets transportation fuels in the United States and has a market cap of $1.9 billion.

The refiners have been seeing big gains lately on big spreads between WTI (West Texas Intermediate) and Brent and other crude cash prices. That dynamic showed up in early March when the company reported strong Q4 results that came in ahead of expectations.

Fourth-Quarter Results

Revenue for the period was up 25% from last year to $1.15 billion. Earnings came in at 8 cents, 14% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 12% over the last three quarters.

The wide cash WTI spreads that drove the good quarter showed up in margins, with gross profit per barrel climbing to $7.15 for the quarter against an average of $3.54 for the year. Refining margin per barrel was $9.54 for the quarter, nicely ahead of the full-year average of $8.07.

Setting the stage for solid margin expansion and income growth, operating expenses per barrel were mostly in line with last year at $3.32 for the year and $3.07 for the quarter.

Financial Profile

The company’s strong earnings momentum has enabled it to strengthen its balance sheet, with cash and equivalents up $164 million from last year to $200 million while total debt fell $14 million to $477 million.

Estimates

We saw some big revisions in estimates on the good quarter, with the current year adding 64 cents to $2.07 and the next-year estimate gaining 67 cents to $2.10.

Valuation

But in spite of the recent gains, CVI still has a compelling valuation, trading with a forward P/E of 11X, below its peer average of 12X.

6-Month Chart

On the chart, CVI just hit a new multi-year after spending most of the last 6 months grinding higher. Look for support from the long-term trend on any weakness, take a look below.