Shares of San Antonio, Texas-based firm Tesoro Corporation (TSO) soared to a 52-week high of $59.90 on Monday, Mar 25, 2013, buoyed by a slew of positive developments. The closing price of the independent refiner on Mar 25, 2013, was $57.85, representing a solid 1-year return of more than 100% and an impressive year-to-date return of about 27%. The average volume of shares traded over the last 30 days stands at approximately 3.6 million.
Tesoro delivered a positive earnings surprise in the two of the last four quarters with an average beat of 12.19%. This Zacks Rank #3 (Hold) company has a market cap of $8.09 billion and a long-term expected earnings growth rate of 13.05%.
The company reported earnings per share (excluding special items) of $1.34, missing the Zacks Consensus Estimate of $1.38 but improving significantly from the year-ago adjusted loss of 87 cents. This was aided by higher margins and a significant crude oil differentials advantage.
Tesoro reported revenue of $8,273.0 million for the three-month period ending Dec 31. This was 15.4% above Zacks Consensus Estimate and was also up 7.3% year over year on the back of higher throughput and solid refining margins.
Additionally, Tesoro announced a 33.0% increase in its quarterly dividend to 20 cents per share, or 80 cents per share annualized. The dividend was paid on Mar 15, to shareholders of record on Feb 28.
Tesoro is one the largest independent oil refiners in the U.S. with a combined crude oil processing capacity of approximately 675,000 Bbl/d. Major advantages for the company include the scale and diversification benefits afforded by its portfolio of seven refineries.
However, the inherent volatility of the refining business reduces the accuracy and reliability of long-term earnings and revenue estimates. Additionally, results are exposed to unplanned shut-downs that may have a lingering impact.
But there are certain other firms in the oil refining and marketing industry that are performing better and are worth considering at current level. These include Lehigh Gas Partners LP (LGP), Marathon Petroleum Corporation (MPC) and PBF Energy Inc. (PBF). All these stocks sport a Zacks Rank #1(Strong Buy).
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