The Caltex Australia Limited (ASX CTX) share price inched higher even as the fuel and convenience store retailer reported further margin compression and falling petrol sales in the June quarter.
The Caltex share price inched up 0.3% to $25.99 in morning trade, which is largely in line with gains by the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.
The bad news is already in the embattled CTX share price and it remains a dog among its peers in the S&P/ASX 200 Energy (Index:^AXEJ) (ASX:XEJ) benchmark with a loss of nearly 16% over the past year when the energy index is down by less than 9%.
In contrast, the Santos Ltd (ASX: STO) share price jumped 12% while the Woodside Petroleum Limited (ASX: WPL) share price lost less than 3% over the period. Even fellow petrol station operator Viva Energy Group Ltd (ASX: VEA) which struggled with its own operational issues is faring better with a loss of 9%.
Getting squeezed
Caltex is the dog of the energy sector and it won't win any friends with the latest quarterly Caltex Refiner Margin (CRM) update. The profit it made in the three months from April to June 2019 fell to US$7.45 per barrel (bbl) from US$7.53 per bbl in the previous quarter.
The squeeze is even bigger compared to the same period last year when Caltex collected US$10.42/bbl.
CRM sales from production was also weaker in the second quarter of calendar year 2019 (Q2CY19). Caltex sold 1,373 mega litres (ML), which is 7.7% lower than Q1CY19 and 13% less than the June quarter in 2018.
But Caltex had already paid the piper when its share price crashed in June after it announced a profit downgrade. Today's bad news was expected although it won't provide a badly needed catalyst for the stock.
Is the CTX share price a buy?
The fact is, there are very few reasons why I would want to buy the stock, even at the current share price, and many reasons why I wouldn't.
Caltex is different from an oil and gas stock as it makes profit from selling fuel, although margins generally fares better when crude prices are rising.
But if I was bullish on the oil price, I would rather buy and oil and gas producer than Caltex. I am also unsure about the longer-term sustainability of selling fuel when electric vehicles are on the rise. Caltex needs to reinvent itself and it isn't yet clear what its future business model would look like.
I think there are better alternatives to Caltex and if you are wondering where else you should be looking for "buy" ideas, you might want to check out the following free report from the experts at the Motley Fool.
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