Financial Contrast: Western Refining (WNR) vs. HollyFrontier Corporation (HFC)

Western Refining (NYSE: WNR) and HollyFrontier Corporation (NYSE:HFC) are both mid-cap energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Valuation & Earnings

This table compares Western Refining and HollyFrontier Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Western Refining N/A N/A N/A $1.08 33.50
HollyFrontier Corporation $10.54 billion 0.71 -$260.45 million $1.90 22.13

Western Refining has higher revenue, but lower earnings than HollyFrontier Corporation. HollyFrontier Corporation is trading at a lower price-to-earnings ratio than Western Refining, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Western Refining and HollyFrontier Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Refining 0.90% 2.76% 1.52%
HollyFrontier Corporation 2.55% 5.18% 2.84%

Dividends

Western Refining pays an annual dividend of $1.52 per share and has a dividend yield of 4.2%. HollyFrontier Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 3.1%. 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 Corporation pays out 69.5% of its earnings in the form of a dividend. Western Refining has increased its dividend for 4 consecutive years and HollyFrontier Corporation has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Western Refining and HollyFrontier Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Refining 0 3 0 0 2.00
HollyFrontier Corporation 2 8 5 1 2.31

Western Refining currently has a consensus price target of $39.00, suggesting a potential upside of 7.79%. HollyFrontier Corporation has a consensus price target of $37.25, suggesting a potential downside of 11.41%. Given Western Refining’s higher probable upside, research analysts clearly believe Western Refining is more favorable than HollyFrontier Corporation.

Risk & Volatility

Western Refining has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, HollyFrontier Corporation has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Insider and Institutional Ownership

64.8% of Western Refining shares are held by institutional investors. Comparatively, 81.5% of HollyFrontier Corporation shares are held by institutional investors. 26.5% of Western Refining shares are held by insiders. Comparatively, 0.5% of HollyFrontier Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

HollyFrontier Corporation beats Western Refining on 11 of the 15 factors compared between the two stocks.

Western Refining Company Profile

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.

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.

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