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Integrated Energy and Refiner Stocks: Updates for Investors

PART:
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Part 3
Integrated Energy and Refiner Stocks: Updates for Investors PART 3 OF 3

Short Interest Impacts Integrated Energy and Refiner Stocks

Alon USA Energy

On March 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 was 13.5%.

Short Interest Impacts Integrated Energy and Refiner Stocks

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In the past three months, Alon USA Energy stock has risen 9.8%. Its short interest-to-equity float ratio fell 3% during the same period. Its net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 3.3x.

In the last four quarters, Alon USA Energy’s revenue rose 29.3%. It incurred an adjusted operating loss of $9.6 million in 4Q16—compared to an adjusted operating loss of $1.4 million in 4Q15. Its operating profit margin is -1.2%—compared to the industry median of 4.7%. Alon USA Energy is among the high implied volatility stocks that we looked at in Part 1 of this series.

PBF Energy

PBF Energy’s (PBF) short interest-to-equity float ratio is 12.0%. In the last three months, the stock has fallen 16.9%, while its short interest-to-equity float ratio has risen 7.9%. Its net debt-to-EBITDA ratio is 4.8x.

In the last four quarters, PBF Energy’s revenue rose 41.3%. Its operating income was $139.8 million in 4Q16—compared to an adjusted operating loss of $176.0 million in 4Q15. Its operating profit margin is 2.9%.

Tesoro

Tesoro’s (TSO) short interest-to-equity float ratio is 9.0%. In the last three months, the stock has fallen 6%, while its short interest-to-equity float ratio has risen 28.7%. The company’s net debt-to-EBITDA ratio is 1.9x. In the last four quarters, Tesoro’s revenue rose 6.4%, while its adjusted operating income fell 80.1%. Its operating profit margin is 7.1%.

HollyFrontier

HollyFrontier’s (HFC) short interest-to-equity float ratio is 7.8%. In the last three months, the stock has fallen 10.3%, while its short interest-to-equity float ratio has fallen 21.8%. Its net debt-to-EBITDA ratio is 1.4x.

In the last four quarters, HollyFrontier’s revenue rose 0.40%. Its operating income was $112.3 million in 4Q16—compared to an operating loss of $64.7 million in 4Q15. Its operating profit margin is 5.8%.

Delek US Holdings

Delek US Holdings’ (DK) short interest-to-equity float ratio is 7.1%. Its net debt-to-EBITDA ratio is 5.0x. In the past three months, its stock has risen 5.9%, while its short interest has fallen 3.5%.

In the last four quarters, Delek US Holdings’ revenue fell 3.4%. It incurred an adjusted operating loss of $44.1 million in 4Q16—compared to an operating loss of $16.7 million in 4Q15. Its operating profit margin is -3.1%.

Conclusions

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

  • The return and short interest for most of the stocks are inversely related.
  • Traders and investors are more bearish on refiner stocks than on integrated energy stocks. All of the companies leading in short interest are relatively small refiners with less diversification in their operations. It could reduce their abilities to withstand volatility in the refining industry.
  • The markets are less bearish on larger and more diversified integrated energy companies. They also figure among the stocks with the lowest implied volatilities.
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