Report
Valens Research

PBF - Valens Credit Report - 2024 07 19

Credit markets are overstating credit risk with a YTW of 6.690% relative to an Intrinsic YTW of 5.788% and an Intrinsic CDS of 166bps. Meanwhile, credit markets are materially overstating the firm's fundamental credit risk, with its Ba3 credit rating five notches lower than Valens' IG4+ (Baa1) credit rating.

Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. That said, as a positive, management members are material owners of PBF equity relative to their annual compensation, indicating they are aligned with shareholders to pursue long-term value creation for the company. Additionally, management members have low change-in-control compensation relative to their annual compensation, indicating they may not be incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.

Earnings Call Forensics™ of the firm's Q1 2024 (05/02/2024) earnings call highlights that management is confident diesel demand is very constructive and supply remains constrained.
Underlying
PBF Energy Inc. Class A

PBF Energy is a holding company. Through its subsidiaries, the company is engaged as an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the U.S. The company operates in two business segments: refining, which the company produces a variety of products at each of its refineries such as gasoline, ultra-low-sulfur diesel, heating oil, jet fuel, lubricants, petrochemicals and asphalt; and logistics, which through its PBF Logistics LP subsidiary, the company owns or leases, operates, develops and acquires crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.

Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

Analysts
Valens Research

Other Reports on these Companies
Other Reports from Valens Research

ResearchPool Subscriptions

Get the most out of your insights

Get in touch