Oil Refineries (TASE:ORL) Earnings Turnaround Puts Its Cheap Looking Valuation In Focus

Oil Refineries stock reaction to a stronger earnings backdrop

Oil Refineries (TASE:ORL) released second quarter 2026 results that showed higher sales of US$2,701 million and net income of US$263 million. This followed a loss in the same period a year earlier.

For the first half of 2026, Oil Refineries reported sales of US$4,642 million and net income of US$255 million, compared with a loss in the prior year period. The latest figures give investors fresh data to reassess the stock after recent gains.

Oil Refineries’ latest earnings update comes after a strong run in the stock, with a 90 day share price return of 19.94% and a year to date share price return of 106.59%. The 1 year total shareholder return of 163.51% points to momentum that has been building over several years, including a 5 year total shareholder return of 462.90%.

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After Oil Refineries’ sharp move over the past year and a stronger earnings backdrop, the real choice now is whether to lock in exposure at today’s price or hold off and wait for a potentially better entry point based on valuation.

Price-to-Earnings of 5.8x for Oil Refineries: Is it justified?

On the latest data, Oil Refineries trades at a P/E of 5.8x, which sits alongside a last close of ₪2.04 and points to a valuation that looks low next to peers.

The P/E ratio compares the company’s share price with its earnings per share. For a business like Oil Refineries that has recently moved back into profit, this multiple gives investors a quick sense of how the market is pricing those earnings.

Oil Refineries is flagged as good value on this measure, with its 5.8x P/E well below both the peer average of 15.3x and the Asian Oil and Gas industry average of 11.9x. That gap suggests the market is assigning a lower price to each unit of current earnings than it does for comparable companies, which some investors may see as a potential valuation cushion, while others may link it to balance sheet and earnings quality considerations such as the large one off gain and interest coverage.

Compared with peers and the wider Asian Oil and Gas group, Oil Refineries’ current 5.8x P/E is presented as materially lower. This indicates a sizeable discount relative to how similar stocks are priced on earnings today.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 5.8x (UNDERVALUED)

However, you still need to weigh risks such as exposure to refining margins and the breadth of Oil Refineries’ operations across multiple segments and regions.

Find out about the key risks to this Oil Refineries narrative.

Another view on Oil Refineries using the SWS DCF model

The P/E points to Oil Refineries looking cheap next to peers. The SWS DCF model offers a second angle. On this approach, the stock at ₪2.04 trades about 24% below an estimated value of ₪2.69, which again suggests a discount rather than a premium.

That lines up with the low P/E, yet both methods rely on assumptions about future cash flows and margins that can change quickly. The question is whether you think those assumptions are conservative enough for the risks in refining and polymers.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Oil Refineries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 274 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this combination of positive earnings and identified risks around Oil Refineries leaves you undecided, review the details now and assess them yourself using the 2 key rewards and 3 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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