In a new report on the downstream (refining and marketing) sector of the oil and gas industry, analysts at Moody’s Investors Service raised their outlook on the sector from negative to positive based on expected growth of earnings before interest, taxes, depreciation and amortization in 2021 “well above” the firm’s 10% minimum threshold for a positive outlook. That’s the good news.

The less-good news is that the downstream sector is so depressed that any recovery will appear massive. Among six refiners’ stocks, the best performer is down by more than a third in the past 12 months, while the worst is down by more than two-thirds. After peaking in early May, all six stocks have trended lower.

While Moody’s expects refining profits to improve over the awful results posted in the second quarter of this year, the firm believes that demand for refined products will remain weak, inventories will remain swollen, prices will remain low and that crack spreads will remain below average. (The crack spread is the overall difference between what a refiner pays for a barrel of crude and the price the refiner is paid for the products extracted from that crude.)

Where Moody’s sees good news is that all the bad news “will spur refiners to review their strategies and financial policies, and will accelerate their closures of less competitive refineries.” While that will help, it’s hard to see exactly why this might be good for a refiner trying to sell a refinery.

Last year, an explosion and fire at the PES refinery in Philadelphia ultimately resulted in the closure of the 350,000-barrel-per-day refinery.

Moody’s also noted that “several” refineries were up for sale this year, but no buyers turned up. That means write-downs, but that’s not especially bad because those are not included in adjusted earnings computations.

Another option appears to be converting existing oil refineries into biodiesel plants. Three refiners already have announced such conversions, but there is not expected to be any impact on 2021 earnings.

Here are six independent oil refiners that have been struggling. We’ve included market cap, Moody’s debt rating and outlook, the company’s estimated earnings for both 2020 and 2021, the multiple for estimated 2021 earnings, and the current dividend yield.

Phillps 66 (NYSE: PSX) is the largest U.S. refiner, with a market cap of $26.1 billion. Moody’s rates the company’s debt at investment grade A3 with a stable outlook. Estimated earnings per share (EPS) for this year is $0.87 and $5.14 for next year. At a recent price of $59.98, Phillips 66 traded a multiple of nearly 12 times expected 2021 earnings and pays a dividend yield of 5.95%. The company has already announced plans to convert some plants to biodiesel and to close others permanently.

Marathon Petroleum Corp. (NYSE: MPC) has a market cap of nearly $21 billion and a Moody’s investment-grade rating of Baa2 with a negative outlook. Analysts expect the company to post a net loss this year of $3.34 a share and a profit of $0.57 in 2021. At a recent price of $31.87, the stock traded at nearly 56 times expected 2021 earnings. Marathon also has announced refinery closures and expects its North Dakota refinery to begin producing biodiesel by the end of this year. Marathon pays a dividend yield of 7.46%.

Valero Energy Corp. (NYSE: VLO) has a market cap of $19.7 billion and a Moody’s investment grade rating of Baa2 with a negative outlook. Shares are expected to post a loss of $2.31 this year and a profit of $2.83 next year. At a recent price of $48.56, the stock traded at about 17 times expected 2021 earnings. Valero’s dividend yield is 7.98%.

HollyFrontier Corp. (NYSE: HFC) has a market cap of $3.6 billion and a Moody’s investment-grade rating of Baa3 with a negative outlook. Analysts are looking for a net loss per share of $0.53 this year and a profit of $1.07 next year. At a recent price of $22.12, shares traded at about 21 times expected 2021 earnings. HollyFrontier also is converting two refineries to biodiesel production. HollyFrontier pays a dividend yield of 6.45%.

CVR Energy Inc. (NYSE: CVI) has a market cap of $1.4 billion and a Moody’s rating of Ba3 (non-investment grade) with a stable outlook. Analysts expect a per-share loss of $1.56 this year and a profit of $0.07 next year. At a recent trading price of $13.97, shares traded at nearly 200 times expected 2021 earnings. CVR has suspended its dividend payment.

PBF Energy Inc. (NYSE: PBF) has a market cap of about $864 million and a Moody’s non-investment grade rating of Ba3 with a negative outlook. Analysts expect a net loss of $7.57 per share this year and a net loss of $1.19 per share in 2021. To help lower expenses, PBF suspended its dividend earlier this year.

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