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Where Is Andeavor Headed in 4Q17?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Part 14
Where Is Andeavor Headed in 4Q17? PART 14 OF 15

Why Short Interest in Andeavor Has Fallen in 4Q17

Short interest in Andeavor

Andeavor’s (ANDV) short interest (percentage of outstanding shares) from fell 3.0% in the beginning of 4Q17 to its current level of 2.3%. This usually means that the bearish sentiment for the stock is decreasing. In the same period, ANDV’s stock price rose 0.7%.

Why Short Interest in Andeavor Has Fallen in 4Q17

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Behind the decreased bearish sentiment

The fall in bearish sentiment could be due to improved 3Q17 earnings and rising synergies from the Western Refining acquisition.

Although Andeavor’s 3Q17 earnings missed estimates, they have risen in 4Q17 due to higher refining margins. ANDV’s operating income increased 140.0% YoY to ~$1.1 billion due to a YoY rise in its Refining and Logistics segments’ operating incomes. Its operating income was somewhat offset by a YoY fall in the Marketing segment’s operating income.

Andeavor completed the Western Refining acquisition in 2Q17. SoANDV’s 3Q17 results showed a full quarter of integrated performance of the merged entity.

The Western Refining acquisition is anticipated to bring benefits of $350.0 million–$425.0 million in terms of larger capacities and operational synergies. Andeavor has achieved synergetic benefits of ~$110.0 million on an annual run-rate basis.

Andeavor has series of projects expected to contribute to its earnings in the near future, which we discussed in the previous article.

Peers’ short interest

ANDV’s peers Valero Energy (VLO), Phillips 66 (PSX), and Delek US Holdings (DK) reported declines in their short interest readings of 1.1%, 0.2%, and 0.2%, respectively, since October. Currently, VLO, PSX, and DK have short interest metrics of 3.8%, 1.2%, and 6.7%, respectively.

During the same period, VLO, PSX, and DK saw a rise in their respective stock prices by 9.2%, 5.6%, and 21.5%.

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