As far as today's trading ...... the overall market was marking DOWN ALL refiners ...not just Holly Frontier.
This companies stock is very reasonable and a price below $ 50 is attractive. That being true we also need to worry that the overall market is overdue for a pullback ....the big question is how soon and how much will it pullback.
Keep your eye on HFC and you may be able to get in LONG at a slightly lower price and then it may move back to the mid-50's !
The sulfur thing just triggered a selloff that has been brewing, refiners have 3 or 4 years to comply with it. The real issue is the discounts for most of the heavy/sour crudes (for ALL refiners) peaked in early Feb and have all but evaporated over the last month or so. That's the mother's milk of HFC (and VLO) profits. WCS is the only one with decent discount (-14.50) and Pegasus impacts supply for some players (not HFC). Cheyenne's coker is down for maintenance so they're not running any WCS now. BTW, there is now a futures market for WCS and it suggests this is the bottom for the discount and it widens back out to -22 over the next couple months. I'll wait until the nervous nellies get done selling and buy back what I sold a few weeks ago.
Rogers...IMO, the volatile, unpredictable margins (depending on numerous factors including the price of oil, differences in spot price of oil in various locales, refinery issues, etc.) ensure that HFC's PE will remain low...Further, assuming the crack price eventually narrows to around $5.00 (as HFC's CEO noted in a recent article), the forward PE is much higher.
That is not a knock on the company; however, it does explain some of the volatility and downward trending....
Those sulphur related costs will be experienced by all refiners and passed on to consumers as just another EPA cost mandated by the Obama administration. I do not see this as affecting margins it will just affect costs and gas prices.
Sentiment: Strong Buy
Today the refiners are heading down because the Valero CEO talked about the hundreds of millions of dollars it is going to cost refiners to upgrade their operations to comply with new EPA rules. This is not new news and an excuse to drive it down for a day. The sell-off is low volume on all 3 that I watch. Tomorrow Phillips reports earnings and if they are good, I think it may drive them all back the other way. Just my observations and opinions as someone that trades refinery stocks.
who cares about making money when you have a sub 6 PE - making money does not matter apparently - I just do not get it - clearly under priced ten dollars a share by normal metrics.
Sentiment: Strong Buy