Par Pacific Holdings Inc. Common Stock (PARR) fair value

ACCE thesis

Par Pacific runs two small refineries, in Hawaii and Washington, and sells the fuel through its own retail and wholesale network across the Pacific Northwest and Hawaii, with the Hawaii plant the only large refinery left on the islands. That isolation is the moat: import-dependent markets with few refiners tend to keep margins above the national average, and the company's 21.1% operating margin reflects it. The near-term driver is its Hawaii Renewable Fuels and Hawaii cracker and Washington capacity work, which the market has been waiting to show up in throughput. Trading at 4.9x trailing earnings against a 10.5x forward multiple, the stock is pricing in a sharp fall in earnings from current levels, while revenue growth of 56.8% and a 53.5% ROE say the business is currently earning well above that. The gap between a trailing multiple that looks cheap and a forward multiple that assumes normalization is the question a PM should test before going further.