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HollyFrontier (HFC) Stock Barely Moves Despite Q3 Earnings Beat

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HollyFrontier Corporation’s stock has shown no substantial movement since the third-quarter 2021 earnings announcement on Nov 3. Despite HFC’s impressive earnings and revenue results, its shares failed to display an uptrend, possibly due to increased operating expenses and escalated capital spending in the quarter under review.

Delving Deeper

HollyFrontier’s third-quarter 2021 adjusted net income per share of $1.28 beat the Zacks Consensus Estimate of 77 cents. The bottom line also rebounded from the year-ago quarter’s loss of 41 cents per share.

This outperformance can primarily be attributed to higher refining margins and throughput along with robust results from the refining as well as Holly Energy Partners L.P. (HEP - Free Report) divisions.

The U.S. refiner’s revenues of $4.69 billion beat the Zacks Consensus Estimate of $3.98 billion and improved 66.3% from third-quarter 2020 sales of $2.82 billion.

Segmental Information

Refining:  Adjusted EBITDA, the main contributor to HollyFrontier’s earnings, was $295.3 million. The figure reversed the year-ago quarter’s loss of $53.6 million. This upside is primarily attributable to solid product demand and improved refinery gross margins, up 140% to $14.87 per barrel. Moreover, margins came above the Zacks Consensus Estimate of $13.89 per barrel.

Total refined product sales volumes averaged 422,020 barrels per day (bpd), up 8.5% from 388,800 bpd in the year-ago quarter. Moreover, throughput increased from 404,140 bpd in the year-ago quarter to 444,730 bpd. Capacity utilization was 102.8%, up from 92.8% in third-quarter 2020.

Lubricants and Specialty Products: EBITDA totaled $167.7 million compared with $60.6 million in the year-ago quarter, primarily reflecting a strong base oil margins. Product sales averaged 31,700 bpd, decreasing from the prior-year level of 33,560 bpd. Throughput was also down 4% year over year to 18,260 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 $77.6 million, up from $55.3 million in the third quarter of 2020.

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation Price, Consensus and EPS Surprise

HollyFrontier Corporation price-consensus-eps-surprise-chart | HollyFrontier Corporation Quote

Balance Sheet

As of Sep 30, HollyFrontier had $1.48 billion in cash and cash equivalents, and $3.07 billion of long-term debt, representing a debt-to-capitalization of 32.7%.

Zacks Rank & Stocks to Consider

HollyFrontier currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are EOG Resources (EOG - Free Report) and Diamondback Energy (FANG - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.

Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and also the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.

The board of directors of Diamondback Energy declared a dividend of 50 cents per share for the third quarter, up 11.1% from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. It also generated a free cash flow of $740 million in the third quarter.

In-Depth Zacks Research for the Tickers Above

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EOG Resources, Inc. (EOG) - free report >>

Holly Energy Partners, L.P. (HEP) - free report >>

Diamondback Energy, Inc. (FANG) - free report >>