Is PBF Energy (NYSE:PBF) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. We can see that PBF Energy Inc. (NYSE:PBF) does use debt in its business. But the more important question is: how much risk is that debt creating?

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Why Does Debt Bring Risk?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is PBF Energy's Net Debt?

As you can see below, at the end of March 2025, PBF Energy had US$2.24b of debt, up from US$1.25b a year ago. Click the image for more detail. However, it does have US$468.6m in cash offsetting this, leading to net debt of about US$1.77b.

A Look At PBF Energy's Liabilities

The latest balance sheet data shows that PBF Energy had liabilities of US$3.77b due within a year, and liabilities of US$4.01b falling due after that. On the other hand, it had cash of US$468.6m and US$1.19b worth of receivables due within a year. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$6.12b.

This deficit casts a shadow over the US$2.14b company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, PBF Energy would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if PBF Energy can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for PBF Energy

In the last year PBF Energy had a loss before interest and tax, and actually shrunk its revenue by 16%, to US$32b. We would much prefer see growth.

Caveat Emptor

Not only did PBF Energy's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable US$1.2b at the EBIT level. Combining this information with the significant liabilities we already touched on makes us very hesitant about this stock, to say the least. That said, it is possible that the company will turn its fortunes around. Nevertheless, we would not bet on it given that it vaporized US$996m in cash over the last twelve months, and it doesn't have much by way of liquid assets. So we think this stock is risky, like walking through a dirty dog park with a mask on. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should be aware of the 1 warning sign we've spotted with PBF Energy .

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.

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