HollyFrontier 4Q Estimates: Earnings Expected to Fall Sequentially



3Q15 estimated and actual performance

HollyFrontier Corporation (HFC) is expected to post its 4Q15 results on February 24, 2016. Before we proceed with 4Q15 estimates, let’s recap HFC’s 3Q15 performance versus estimates.

In 3Q15, HFC’s revenues surpassed Wall Street analysts’ estimates by 8%. Plus, in 3Q15, adjusted EPS stood at $1.8, around 6% higher than the estimated EPS of $1.7. Also, 3Q15 EPS was almost double the 3Q14 adjusted EPS due to rising refining margins that strengthened refining companies’ earnings.

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HFC’s 4Q15 estimates: Expected to fall

In 4Q15, per Wall Street analysts’ estimates, HFC is expected to post earnings per share or EPS of $0.31. This forecast is higher than the 4Q14 adjusted EPS of $0.12. HFC’s revenues are estimated at around $2.5 billion in 4Q15, 41% lower than 4Q14 revenues.

In 4Q15, HFC’s refining index values plunged in Midcon (the Mid-continent), the Rockies (the Rocky Mountains), and the Southwest compared to 3Q15. This fall points to likely weakness in HFC’s refining margin in 4Q15 compared to 3Q15. We discuss this concern in the next part of this series.

Sequentially, HFC’s 4Q15 EPS is expected to be 83% lower than 3Q15 adjusted EPS. HFC’s peers Valero Energy Corporation (VLO), Tesoro Corporation (TSO), and Phillips 66 (PSX) have posted results with 36%, 72%, and 57% lower EPS in 4Q15 over 3Q15, respectively. The iShares U.S. Energy ETF (IYE) has ~9% exposure to refining sector stocks.

HFC’s yearly estimates

In 2015, HFC’s revenues are expected to be around $12.9 billion—35% lower than 2014. But stronger refining margins are expected to pour down to the bottom line, resulting in higher earnings. HFC, per Wall Street analysts’ estimates, is expected to post EPS of $4.8 in 2015, around 76% higher than its 2014 adjusted EPS.


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