Bear Of The Day: CVR Refining (CVRR)

I just finished up an Investment Idea piece where I was bullish on the refiners. But it wasn’t a blanket “Buy” on all refining stocks. I feel like right now is a good time to scoop up some of these names while the rest of the market turns its back on oil. While consumer stocks may be a good place to invest in and capitalize on cheaper oil, the refiners ought to be in that discussion as well. After all, their number one input is oil. So having cheaper input prices should lead to profits.

But even though there are a few stocks like Zacks Rank #2 (Buy) Tesoro (TSO - Analyst Reportand Murphy USA (MUSA - Snapshot Report) I like, there are also a few you should stay away from. One of those is our Bear of the Day, Zacks Rank #5 (Strong Sell) CVR Refining (CVRR - Snapshot Report).

CVR Refining, LP is engage in the refining of petroleum primarily in the United States. It has refining and related logistics assets that operate in the mid-continent region. The company operates mostly in Kansas, Oklahoma and Texas.

Analysts haven’t been as bullish on CVR Refining as they’ve been with some of the other refiners in the sector. Over the last week, one analyst has dropped his estimates for the current quarter, current year, and next year. The result has dropped our Zacks Consensus from 69 cents to 52 cents for the current quarter, and dropped the current year from $4.26 to $3.50. Next year’s numbers were affected as well, dropping from $3.42 down to $2.99.


Last quarter, the blame for lower than estimated earnings were larger-than-expected repair expenses at the Coffeyville plant as well as declining margins. The good news is the repairs were completed in August so that shouldn’t have an effect on the current quarter’s operations.

The chart shows a chart that has been struggling during a period where oil prices have seen some steady declines. Aside from a rally from January to May 2014, CVRR has been locked in a downtrend for most of the last couple years. Even with a huge dividend payout, the stock isn’t giving any sort of total return to investors.

After reaching a now 52-week high at $28.55, CVRR started a steady decline quarter after quarter. The real pain didn’t start until late October after its last gasp upwards. A quick bounce in the stock off the lows of mid-October took CVRR from $20.75 to $25.15 in a couple of weeks. That bullish rebound was short-lived however, and the stock began to unwind again heading into November. Since then it’s been a virtual freefall with the stock dropping down to fresh lows down at $13.37. 

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Duke Peters 5 years ago Member's comment

Bear of the day as in setting this up for a short sale? Sounds like it. I'm bullish $CVRR.