HollyFrontier’s fourth-quarter 2021 adjusted net loss per share of 11 cents was wider than the Zacks Consensus Estimate of 2 cents. This underperformance can primarily be attributed to lower-than-expected refining margins and relatively poor results in the Holly Energy Partners L.P. division.

However, the bottom line was narrower than the year-ago quarter’s loss of 74 cents per share on strong demand for HollyFrontier’s transportation fuels.

The U.S. refiner’s revenues of $5.62 billion beat the Zacks Consensus Estimate of $4.25 billion and improved 93.8% from fourth-quarter 2020 sales of $2.90 billion.

Segmental Information

Refining:  Adjusted EBITDA of the refining unit, the main contributor to HFC’s earnings, was $24.98 million. The figure reversed the year-ago quarter’s loss of $111.5 million. This upside is primarily attributable to solid product demand and improved refinery gross margins, up 116% to $8.70 per barrel. However, margins were lower than the Zacks Consensus Estimate of $9.36 per barrel.

Total refined product sales volumes averaged 474,230 barrels per day (bpd), up 13.5% from 417,990 bpd in the year-ago quarter. Moreover, throughput increased from 412,780 bpd in the year-ago quarter to 462,740 bpd. Capacity utilization was 83.6%, down from 93.8% in the fourth quarter of 2020.

Lubricants and Specialty Products: EBITDA totaled $74.9 million compared to a loss of $32.7 million in the year-ago quarter, primarily reflecting strong base oil margins. Product sales averaged 35,120 bpd, increasing from the prior-year level of 33,559 bpd. However, throughput was down 12.4% year over year to 18,760 bpd in the reported quarter.

HEP: This unit includes HollyFrontier’s majority interest in Holly Energy Partners, a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.

Segmental EBITDA was $70.8 million, down from $86.8 million in the fourth quarter of 2020.

Balance Sheet

As of Dec 31, HollyFrontier had $234.4 million in cash and cash equivalents and $3.07 billion of long-term debt, representing a debt-to-capitalization of 32.8%

Guidance

The refiner projects first-quarter throughput in the range of 490,000-510,000 bpd. The projection takes into account weather-associated stoppages at the Puget Sound refinery, a planned turnaround at the Woods Cross refinery and maintenance activities at the Navajo refinery throughout the March quarter. On a positive note, HFC management sees continued strength in transportation fuels consumption due to the global economic recovery.

Zacks Rank & Stocks to Consider

HollyFrontier currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the same space are Valero Energy (VLO Quick QuoteVLO - Free Report) and Marathon Petroleum (MPC Quick QuoteMPC - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Valero’s 2022 earnings is projected at $7.10 per share, up about 152.7% from the projected year-ago earnings of $2.81.

Valero beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 75.7%.

Marathon Petroleum beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being about 75%. Marathon stock has increased around 36.5% in a year.

The Zacks Consensus Estimate for MPC’s 2022 earnings is projected at $5.63 per share, up 129.8 % from the projected year-ago earnings of $2.45.