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Analyzing Integrated Energy and Refining Companies

PART:
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Part 3
Analyzing Integrated Energy and Refining Companies PART 3 OF 3

Short Interest Impacts Your Integrated Energy and Refiner Stocks

Alon USA Energy

As of February 16, 2017, Alon USA Energy (ALJ) had the highest short interest-to-equity float ratio among our list of integrated energy and refiner stocks. Its ratio is 13.9%.

Short Interest Impacts Your Integrated Energy and Refiner Stocks

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In the past three months, Alon USA Energy stock rose 31%. Its short interest-to-equity float ratio fell 9.3% during the same period. Alon USA Energy’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 3.3x.

In the last four quarters, its revenue fell 9.3%. It incurred an operating loss of $3.4 million in 3Q16—compared to an operating profit of $86.9 million in 3Q15. Alon USA Energy’s operating profit margin is -1.4%—compared to the industry median of 4.1%.

Alon USA Energy is expected to release its 4Q16 earnings on February 23, 2017. It’s one of the high implied volatility stocks that we discussed in Part 1 of this series.

PBF Energy

PBF Energy’s (PBF) short interest-to-equity float ratio is 13.4%. In the last three months, the stock fell 6%, while its short interest-to-equity float ratio rose 7.2%. The company’s net debt-to-EBITDA ratio is 4.8x.

In the last four quarters, PBF Energy’s revenue rose 41.3% and its operating income was $139.8 million in 4Q16—compared to an adjusted operating loss of $176 million in 4Q15. PBF Energy is another high implied volatility stock that we discussed in Part 1 of this series.

HollyFrontier

HollyFrontier’s (HFC) short interest-to-equity float ratio is 8.1%. In the last three months, the stock rose 8%, while the short interest-to-equity float ratio fell 12.8%. Its net debt-to-EBITDA ratio is 1.2x.

In the last four quarters, HollyFrontier’s revenue fell 20.6%, while its operating income fell 61.2%. Its operating profit margin is 5.8%. HollyFrontier is expected to announce its 4Q16 earnings on February 22, 2017.

Tesoro

Tesoro’s (TSO) short interest-to-equity float ratio is 7.6%. In the last three months, the stock rose 1.7%, while the short interest-to-equity float ratio rose 109.3%. The company’s net debt-to-EBITDA ratio is 1.8x. In the last four quarters, Tesoro’s revenue rose 6.4%. Its operating profit margin is 7.1%.

Delek US Holdings

Delek US Holdings’ (DK) short interest-to-equity float ratio is 7.3%. Its net debt-to-EBITDA ratio is 5.0x. In the past three months, the stock returned 21.9%. The stock’s short interest fell 18.5% during this period.

In the last four quarters, its revenue fell 16.5%. It incurred an adjusted operating loss of $2.8 million in 3Q16—compared to an operating profit of $14 million in 3Q15. Delek US Holdings’ operating profit margin is -0.8%. Delek US Holdings is expected to announce its 4Q16 earnings on February 27, 2017.

Conclusions

From the analysis in this series, we can make the following observations:

  • Most of the stocks witnessed a fall in short interest as their stocks rose.
  • Traders and investors are more bearish on refiner stocks than on integrated energy stocks. All of the companies leading in short interest are relatively smaller refiners with less diversification in their operations. It could reduce their ability to withstand volatility in the refining environment.
  • Markets are less bearish on larger and more diversified integrated energy companies. They also figure among the low volatility stocks, as we saw in Part 1 of this series.
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