HollyFrontier (HFC) Stock Barely Moves Despite Q2 Earnings Beat

HollyFrontier Corporation’s HFC stock has shown no substantial movement since second-quarter 2021 earnings announcement on Aug 4. Despite the company’s impressive earnings and revenue results, the firm’s shares failed to display an uptrend possibly due to increased operating expenses and an escalated capital spending in the quarter under review.

Delving Deeper

HollyFrontier’s second-quarter 2021 adjusted net income per share of 87 cents beat the Zacks Consensus Estimate of 63 cents. The bottom line also rebounded from the year-ago quarter’s loss of 25 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 lubricants and specialty products divisions.

The U.S. refiner’s revenues of $4.58 billion beat the Zacks Consensus Estimate of $3.13 billion and improved 122.3% from second-quarter 2020 sales of $2.06 billion.

Segmental Information

Refining: Adjusted EBITDA, which is the main contributor to HollyFrontier’s earnings, was $211.2 million, reflecting a massive climb from the year-ago quarter’s income of $25 million. This upside is primarily attributable to solid product demand along with improved refinery gross margins, which were up 45% to $11.71 per barrel. Moreover, margins came above the Zacks Consensus Estimate of $11.41 per barrel.

Total refined product sales volumes averaged 443,940 barrels per day (bpd), up 27.2% from 348,890 bpd in the year-ago quarter. Moreover, throughput increased from 337,850 bpd in the year-ago quarter to 444,730 bpd. Capacity utilization was 102.8%, up from 77.1% in second-quarter 2020.

Lubricants and Specialty Products: EBITDA totaled $79.2 million against a loss of $189.5 million in the year-ago quarter, primarily reflecting a strong base oil margins. Product sales averaged 36,670 bpd, increasing from the prior-year level of 26,990 bpd. Throughput was also up 18% year over year to 19,310 bpd in the reported quarter.

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

Segmental EBITDA was $88.1 million, down from $112.5 million in the second quarter of 2020.

Balance Sheet

As of Jun 30, HollyFrontier had $1.4 billion in cash and cash equivalents, and $3.1 billion of long-term debt, representing a debt-to-capitalization of 33.9%.

Zacks Rank & Key Picks

HollyFrontier has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Matador Resources (NYSE:MTDR) Company MTDR and Continental Resources (NYSE:CLR), Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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