A month has gone by since the last earnings report for HollyFrontier . Shares have added about 3.2% 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 its most recent earnings report in order to get a better handle on the important drivers.
HollyFrontier’s Q3 Earnings and Sales Better Than Expected
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 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.
Refining: Adjusted EBITDA, which is 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 along with improved refinery gross margins, which were 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.
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%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 341.85% due to these changes.
At this time, HollyFrontier has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise HollyFrontier has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.