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Should Value Investors Buy HollyFrontier (HFC) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is HollyFrontier (HFC). HFC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.11. This compares to its industry's average Forward P/E of 10.45. Over the past year, HFC's Forward P/E has been as high as 11.22 and as low as 6.45, with a median of 9.06.

We also note that HFC holds a PEG ratio of 0.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HFC's industry has an average PEG of 1.09 right now. HFC's PEG has been as high as 1.10 and as low as 0.66, with a median of 0.92, all within the past year.

Finally, we should also recognize that HFC has a P/CF ratio of 5.84. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 7.06. Over the past year, HFC's P/CF has been as high as 6.57 and as low as 4.26, with a median of 5.56.

Value investors will likely look at more than just these metrics, but the above data helps show that HollyFrontier is likely undervalued currently. And when considering the strength of its earnings outlook, HFC sticks out at as one of the market's strongest value stocks.


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