I've read this company brings in 1.24 million bucks per employee. The dividend is 20%, the PE ratio is around 5. Why is this stock so cheap. Why doesn't this company get more credit for what they do?
I live in the area where this refinery is located, and also where there SA gas stations are located. There was maintenance done, on a couple refineries in IL, and the price of gasoline sky rocketed, to over four dollars a gallon, almost the highest in the nation until recently, in this area. We are still paying higher gas prices, than the national average. I expect a pleasant earning surprise, for NTI, the next quarter.
This will be a volatile stock. Thinly traded and subject to big swings. It's not like Exxon with so much diversity its earnings can be predicted. NTI had some major maintenance this quarter which will likely result in lower earnings. This will present a possible buying opportunity. Not many brokerages cover NTI and I use Merrill Lynch. They're only predicting $0.65 for second quarter but then $1.77 for 3rd quarter because of spreads and summer driving. Like other posters say--MLP restricts some from owning this. It will all work out but it will test resolve. Earnings announcements are a bigger deal for NTI than almost any othe company I own because it determines dividend. Best wishes to all.
Additionally, this is a hard company to analyze so many brokerages will steer clear of it.
The dividend is variable so you can't count on a 20% yield. Having said that the stock still appears very undervalued. Sometimes the market is just wrong in the short term. Either the pps will rise or you can collect a very high yield for years to come.
Sentiment: Strong Buy
In 2012, sales per employee were closer to $ 1.6 million - $ 4.653 billion of sales divided by 2,893 employees. The number is actually misleading low, since most of the employees work in the retail stores. If you went strictly by the refinery, the number would be far higher. And if you like that metric, GLP (another MLP) has sales of more than $ 22 million per employee - $ 17 billion plus in sales, 788 employees.
GLP as a distributor has done well. I think the spread now from WTI to Brent is not helping US Refiners. Either WTI must go down or Brent must go up. If the keystone pipeline is passed WTI may drop and the spread comes back ???
I am long and feel NTI is undervalued, but there are substantial risks and some misunderstandings that are currently holding the price down. NTI basically makes money from the crack spread, which is the difference between what a refinery can buy crude, and what it can sell gasoline and heating oil for. The crack spread is very volatile and creates a lot of risk. It is also somewhat historically high right now, not super high, but fairly high. NTI also benefits a few dollars/barrel on top of the crack spread from cheaper crude from Canada and North Dakota because there is not enough pipeline to get all the crude out of the midwest to the coastal refirneries. The other main option is railroad, which adds cost. Many expect this price advantage to dwindle eventually (say 3-10 years) as more pipeline is built. So many people think NTI will earn less in the long term than now, and everyone hates longterm negative growth. Its also a new company and an mlp which has complicated tax requirements and is often restricted from being held in some retirement accounts. So a 20% dividend goes along with limited upside and a limited potential base of buyers. The next dividend will also be lower due to a 1 month turnaround last quarter, estimates range widely from .50-1.10. I'm buying as long as its under 30.
Thanks, I appreciate your thoughtful answer.
I'm familiar with crack spreads and have owned Western Refining from time to time over the last few years which also benefits from a wide crack spread. I also own VNR and have owned LINE (MLPs) from time to time over the last few years - my nephew worked from Linn.
Personally, I see NTI's biggest advantage as their proximity to Canada - even if the pipeline gets built.
Do you know about the operators themselves - are they experienced and trustworthy? Ever been in one of their retail stores? Are they clean and busy?
Thanks again - I appreciate the dialog. G in Denver