Western Refining (NYSE: WNR) and HollyFrontier Corp (NYSE:HFC) are both mid-cap petroleum refining companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.
Insider & Institutional Ownership
64.8% of Western Refining shares are owned by institutional investors. Comparatively, 81.2% of HollyFrontier Corp shares are owned by institutional investors. 26.5% of Western Refining shares are owned by company insiders. Comparatively, 0.5% of HollyFrontier Corp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Western Refining pays an annual dividend of $1.52 per share and has a dividend yield of 4.2%. HollyFrontier Corp pays an annual dividend of $1.32 per share and has a dividend yield of 3.2%. Western Refining pays out 140.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HollyFrontier Corp pays out 69.5% of its earnings in the form of a dividend. Western Refining has raised its dividend for 4 consecutive years and HollyFrontier Corp has raised its dividend for 5 consecutive years.
Earnings and Valuation
This table compares Western Refining and HollyFrontier Corp’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|HollyFrontier Corp||$10.54 billion||0.70||-$260.45 million||$1.90||22.03|
Western Refining has higher revenue, but lower earnings than HollyFrontier Corp. HollyFrontier Corp is trading at a lower price-to-earnings ratio than Western Refining, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Western Refining has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, HollyFrontier Corp has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.
This is a summary of recent ratings and price targets for Western Refining and HollyFrontier Corp, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Western Refining presently has a consensus price target of $39.00, suggesting a potential upside of 7.79%. HollyFrontier Corp has a consensus price target of $38.08, suggesting a potential downside of 9.00%. Given Western Refining’s higher probable upside, research analysts plainly believe Western Refining is more favorable than HollyFrontier Corp.
This table compares Western Refining and HollyFrontier Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
HollyFrontier Corp beats Western Refining on 11 of the 15 factors compared between the two stocks.
About Western Refining
Western Refining, Inc. is an independent crude oil refiner and marketer of refined products. The Company operates through segments, including refining, Western Refining Logistics, LP (WNRL), retail and Other. As of December 31, 2016, the refining segment owned and operated three refineries that process crude oil and other feedstocks primarily into gasoline, diesel fuel, jet fuel and asphalt. The refining segment also sells refined products in the Mid-Atlantic region and Mexico. WNRL owns and operates terminal, storage, transportation and wholesale assets in the Southwest and terminal and storage assets in the Upper Great Plains region. The retail segment operates retail convenience stores and unmanned commercial fleet fueling (cardlock) locations located in the Southwest (Southwest Retail) and Upper Great Plains (SuperAmerica) regions. It markets refined products to a customer base, including wholesale distributors and retail chains.
About HollyFrontier Corp
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.
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