HollyFrontier Q3 Earnings: Time To Buy Struggling NYSE:HFC Stock?

in EARNINGS/INVESTING IDEAS by

HollyFrontier Corporation (NYSE:HFC) is scheduled to report Q3 earnings results before markets open for trading on November 5, 2020.

The company is expected to report earnings of -$0.50/share on revenue of $2.315 billion. The consensus earnings per share (EPS) of -$0.50/share is based on a poll of 15 analysts and represents a decline in eps of −129.7% over the same quarter last year, when the company reported earnings of $1.68/share.

The revenue forecast of $2.315 billion based on a poll of 8 analysts implies a year-over-year (YoY) decline in revenue of −47.7%. Last year the company reported $4.425 billion in revenue for the quarter.

Expected to report EPS of -$0.50/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,314.58 $4,424.83 −47.7%
EPS -$0.50 $1.68 −129.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from HollyFrontier Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.53 -$0.25 53.1% Beat
Q1, 2020 $0.41 $0.53 29.3% Beat
Q4, 2019 $0.55 $0.48 −12.3% Missed
Q3, 2019 $1.43 $1.68 17.1% Beat
Q2, 2019 $1.63 $2.18 34.0% Beat
Q1, 2019 $0.40 $0.54 36.6% Beat
Q4, 2018 $1.95 $2.25 15.3% Beat
Q3, 2018 $1.66 $1.98 19.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $25.96 $25.50 −1.8% Decline
May 7, 2020 $30.01 $31.21 4.0% Increase
February 20, 2020 $42.82 $43.03 0.5% Increase
October 31, 2019 $56.87 $54.34 −4.4% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.93, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.93 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

HollyFrontier Corporation is currently trading at $17.23/share, down −7.2% for the day. The company is trading at approximately 29.7% of its 52-week high of $58.80/share. The company’s stock price is down −32.4% since the last earnings report and down −10.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 38.08 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HFC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −17.42 and a forward P/E multiple of −35.45.

HollyFrontier Corporation’s current share price also implies a price-to-book (P/B) multiple of 0.52. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $17.23
P/E Ratio −17.4x
P/E Ratio (Fwd) −35.5x
PEG Ratio 0.2
Total Debt / Total Capital 45.5%
Levered Free Cash Flow $585.3 million
EV / EBITDA 6.7x

Finbox

HollyFrontier Corporation is a mid-cap stock with a market capitalization of $2.989 billion and a total enterprise value of $5.556 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

HollyFrontier Corporation operates as an independent petroleum refiner in the United States. The company operates through three segments: Refining, Lubricants and Specialty Products, and HEP. It primarily produces high-value light products, such as gasoline, diesel and jet fuel, and specialty lubricant products, as well as specialty and modified asphalt. The company offers its products to other refiners, convenience store chains, independent marketers, retailers, truck stop chains, wholesalers, railroads, governmental entities, and paving contractors or manufacturers, as well as for commercial airline use. It owns and operates 5 refineries with a combined crude oil processing capacity of approximately 457,000 barrels per day in El Dorado, Kansas; Tulsa, Oklahoma; Artesia, New Mexico; Cheyenne, Wyoming; and Woods Cross, Utah. The company also owns and operates vacuum distillation and other facilities in Lovington, New Mexico, as well as asphalt terminals in Arizona, New Mexico, and Oklahoma. Its refineries serve markets in the Mid-Continent, Southwest, and Rocky Mountain regions of the United States. In addition, HollyFrontier Corporation produces base oils and other specialized lubricant products; and owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities, and refinery processing units. The company was formerly known as Holly Corporation and changed its name to HollyFrontier Corporation as a result of its merger with Frontier Oil Corporation in July 2011. HollyFrontier Corporation was founded in 1947 and is headquartered in Dallas, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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