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HollyFrontier’s Q3 Estimates: First Compared to PSX, VLO, MPC

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Ranking refiners’ estimated performances

In this series, we’re ranking four American refiners—Marathon Petroleum (MPC), HollyFrontier (HFC), Valero Energy (VLO), and Phillips 66 (PSX)—on their estimated year-over-year growth in earnings in the third quarter of 2018. HollyFrontier tops the chart with a massive rise in earnings. Valero is last, and Phillips 66 and Marathon Petroleum occupy the second and third spots, respectively.

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HollyFrontier’s Q3 2018 estimates

HollyFrontier, according to Wall Street analysts, is estimated to post EPS of $1.70 in the third quarter. That’s 60% higher than its adjusted EPS in the third quarter of 2017. It’s also 18% higher than the second quarter of 2018. Its revenues are estimated at $4.3 billion in the third quarter, which is 14% higher than the third quarter of 2017.

HollyFrontier’s refining margins could be lower in the third quarter due to weaker refining conditions. In the quarter, its refining index values narrowed year-over-year in two of its three operating areas. Midcon and Southwest index values have declined $1.20 per barrel YoY (year-over-year) and $0.60 per barrel YoY, respectively, to $18.90 per barrel and $22.50 per barrel, respectively, in the third quarter. However, HollyFrontier’s Rockies index value has risen $2.60 per barrel YoY to $28.80 per barrel in the third quarter.

Midcon and Southwest together accounted for 86% of HollyFrontier’s total throughput in the second quarter of 2018. So the YoY decline in refining index values in these regions point to a likely fall in HollyFrontier’s refining margin in the third quarter.

However, RIN (Renewable Identification Number) prices have declined in the quarter. That could provide a respite from its compliance costs. HFC’s lubricants and midstream segments could support its earnings growth in the third quarter.

Let’s move on now and look at Phillips 66’s earnings estimate for the third quarter of 2018.

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