Reviewing HollyFrontier Corporation (HFC) and Alon USA Energy (ALJ)
HollyFrontier Corporation (NYSE: HFC) and Alon USA Energy (NYSE:ALJ) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, earnings, valuation, analyst recommendations, dividends, risk and institutional ownership.
HollyFrontier Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 4.5%. Alon USA Energy pays an annual dividend of $0.60 per share and has a dividend yield of 4.5%. HollyFrontier Corporation pays out 167.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alon USA Energy pays out -107.1% of its earnings in the form of a dividend. HollyFrontier Corporation has increased its dividend for 4 consecutive years and Alon USA Energy has increased its dividend for 5 consecutive years. Alon USA Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
84.9% of HollyFrontier Corporation shares are held by institutional investors. Comparatively, 49.5% of Alon USA Energy shares are held by institutional investors. 0.5% of HollyFrontier Corporation shares are held by insiders. Comparatively, 8.8% of Alon USA Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Volatility and Risk
HollyFrontier Corporation has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, Alon USA Energy has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.
This is a breakdown of current ratings and target prices for HollyFrontier Corporation and Alon USA Energy, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alon USA Energy||0||3||1||0||2.25|
HollyFrontier Corporation presently has a consensus target price of $30.40, indicating a potential upside of 2.60%. Alon USA Energy has a consensus target price of $11.38, indicating a potential downside of 14.60%. Given HollyFrontier Corporation’s higher possible upside, equities analysts clearly believe HollyFrontier Corporation is more favorable than Alon USA Energy.
Valuation & Earnings
This table compares HollyFrontier Corporation and Alon USA Energy’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|HollyFrontier Corporation||$12.34 billion||0.43||$750.80 million||$0.79||37.51|
|Alon USA Energy||N/A||N/A||N/A||($0.56)||-23.79|
HollyFrontier Corporation has higher revenue and earnings than Alon USA Energy. Alon USA Energy is trading at a lower price-to-earnings ratio than HollyFrontier Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares HollyFrontier Corporation and Alon USA Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alon USA Energy||0.89%||5.65%||1.96%|
HollyFrontier Corporation Company Profile
HollyFrontier Corporation is an independent petroleum refiner. The Company produces various light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. It segments include Refining and Holly Energy Partners, L.P. (HEP). The Refining segment includes the operations of the Company’s El Dorado, Kansas (the El Dorado Refinery); refinery facilities located in Tulsa, Oklahoma (collectively, the Tulsa Refineries); a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the Navajo Refinery); refinery located in Cheyenne, Wyoming (the Cheyenne Refinery); a refinery in Woods Cross, Utah (the Woods Cross Refinery), and HollyFrontier Asphalt Company (HFC Asphalt). The HEP segment involves all of the operations of HEP. HEP is a limited partnership, which owns and operates logistic assets.
Alon USA Energy Company Profile
Alon USA Energy, Inc. is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company’s segments include refining and marketing, asphalt and retail. Its refineries produce petroleum products, including various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt, and other petroleum-based products. As of December 31, 2016, it held interests in Alon USA Partners, LP, which owned a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day and an integrated wholesale marketing business. In addition, it owned a crude oil refinery in Krotz Springs, Louisiana, with a crude oil throughput capacity of approximately 74,000 barrels per day (bpd), as of December 31, 2016. The Company also owns crude oil refineries in California. As of December 31, 2016, it operated approximately 300 convenience stores.
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