HollyFrontier Corporation (NYSE:HFC) just released its latest quarterly results and things are looking bullish. The results were impressive, with revenues of US$2.8b exceeding analyst forecasts by 22%, and statutory losses of US$0.01 were likewise much smaller than the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the ten analysts covering HollyFrontier provided consensus estimates of US$11.8b revenue in 2021, which would reflect a discernible 6.9% decline on its sales over the past 12 months. HollyFrontier is also expected to turn profitable, with statutory earnings of US$0.88 per share. Before this earnings report, the analysts had been forecasting revenues of US$11.9b and earnings per share (EPS) of US$0.64 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$28.71, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on HollyFrontier, with the most bullish analyst valuing it at US$41.00 and the most bearish at US$17.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 6.9%, a significant reduction from annual growth of 7.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. It's pretty clear that HollyFrontier's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around HollyFrontier's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on HollyFrontier. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for HollyFrontier going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 3 warning signs we've spotted with HollyFrontier (including 1 which doesn't sit too well with us) .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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