Refining companies’ stock gains slashed
2015 was a phenomenal year for refining companies, except for the month of December. Refining companies’ stocks gained throughout the year on the back of healthier refining margins, but lost their shine in December 2015 due to the abolition of the crude oil export ban in the United States, which raised fears of falling margins for US refineries. HollyFrontier (HFC) gained 24% in the TTM (trailing 12 months) to December 1, 2015, and currently stands to gain a meager 2% on a TTM basis.
The situation is the same for HollyFrontier’s peers Marathon Petroleum (MPC), Phillips 66 (PSX), and Western Refining (WNR), which gained 1%, 9%, and 2%, respectively, in the TTM. If you’re looking for exposure to refining sector stocks, you could consider the Energy Select Sector SPDR ETF (XLE).
HollyFrontier’s stock performance has been volatile
HollyFrontier’s stock performance has been quite volatile over the past year. The stock witnessed highs of $54 in August 2015 and lows of $30 in January 2015. HollyFrontier’s 50-day moving average crossed over its 200-day moving average in July 2015. The stock saw highs in August 2015 on the back of strong 2Q15 results. Plus, HollyFrontier (HFC) repurchased shares and declared dividends, which pushed up its stock price further, and this trend continued into 3Q15. However, the news of the lifting of the oil export ban led to a steep fall in the company’s stock price. HollyFrontier broke below its 50- and 200-day moving averages. Currently, HollyFrontier’s (HFC) stock trades below both averages.
Widening refining margins in 3Q15
In 3Q15, HollyFrontier’s net income of $196 million rose by 12% from 3Q14. This was due to a rise in operating income from the refining and midstream segments. Gross refining margins rose by 27% over 3Q14 to $19.90 per barrel in 3Q15, and the operating income from HollyFrontier’s midstream segment rose by $4 million. HollyFrontier reported EPS (earnings per share) of $1.10 for the quarter.