It has been about a month since the last earnings report for HollyFrontier (
HFC Quick Quote HFC - Free Report) . Shares have added about 52.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is HollyFrontier due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
HollyFrontier Q3 Loss Narrower Than Expected HollyFrontier Corp. reported third-quarter 2020 net loss per share (excluding special items) of 41 cents, narrower than the Zacks Consensus Estimate of a loss of 54 cents. The outperformance reflects stronger-than-expected refining throughput and robust results from the Lubricants and Specialty Products division. However, the bottom line compared unfavorably with the year-ago adjusted profit of $1.68. The underperformance mainly stemmed weak refining margins. Revenues of $2.8 billion beat the Zacks Consensus Estimate of $2.4 billion but slumped 36.3% from the third-quarter 2019 sales of $4.4 billion. Segmental Information Adjusted loss from the Refining segment, which is the main contributor to HollyFrontier’s earnings, was $53.6 million. This reflected a massive plunge from the year-ago quarter’s income of $424.6 million, primarily due to sharply narrower gross margins, which was down 71% to $4.93 per barrel as steps to limit the spread of coronavirus significantly disrupted product demand. Moreover, margins came below the Zacks Consensus Estimate of $6.63 per barrel. Refining: Total refined product sales volumes averaged 407,280 barrels per day (bpd), down 16.1% from 485,500 bpd in the year-ago quarter. Moreover, throughput decreased from 506,800 bpd in the year-ago quarter to 421,100 bpd but outpaced the Zacks Consensus Estimate of 395,000 bpd. Meanwhile, capacity utilization was 85.5%, down from 104.2% in third-quarter 2019. : The segment EBITDA totaled $60.6 million, 59.5% higher than $38 million reported in the year-ago quarter on rebounding consumption of finished lubricants and base oils. Product sales averaged 33,560 bpd, decreasing from the prior-year level of 36,160 bpd. Further, throughput fell 18% year over year to 19,020 bpd in the reported quarter. Lubricants and Specialty Products Segment EBITDA was $55.3 million, down from $123.1 million in third-quarter 2019. Earnings were dragged down by a goodwill impairment charge. HEP: Balance Sheet As of Sep 30, HollyFrontier had approximately $1.5 billion in cash and cash equivalents, and $3.2 billion in long-term debt, representing a debt-to-capitalization of 35.1%. During the quarter, the company paid $57.2 million in dividends. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -67.88% due to these changes.
At this time, HollyFrontier has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise HollyFrontier has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.