Financial Analysis: Delek US Holdings (DK) versus HollyFrontier Corporation (HFC)

Delek US Holdings (NYSE: DK) and HollyFrontier Corporation (NYSE:HFC) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Valuation & Earnings

This table compares Delek US Holdings and HollyFrontier Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delek US Holdings $4.58 billion 0.30 $58.00 million ($2.32) -9.57
HollyFrontier Corporation $12.34 billion 0.41 $733.52 million $0.79 36.15

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Delek US Holdings and HollyFrontier Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delek US Holdings 0 12 3 0 2.20
HollyFrontier Corporation 3 5 4 0 2.08

Delek US Holdings currently has a consensus price target of $24.31, suggesting a potential upside of 9.49%. HollyFrontier Corporation has a consensus price target of $30.40, suggesting a potential upside of 6.44%. Given Delek US Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Delek US Holdings is more favorable than HollyFrontier Corporation.

Risk & Volatility

Delek US Holdings has a beta of 1.92, indicating that its share price is 92% more volatile than the S&P 500. Comparatively, HollyFrontier Corporation has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Profitability

This table compares Delek US Holdings and HollyFrontier Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delek US Holdings -3.15% -4.60% -1.80%
HollyFrontier Corporation 1.13% 2.65% 1.50%

Insider & Institutional Ownership

97.2% of Delek US Holdings shares are owned by institutional investors. Comparatively, 84.9% of HollyFrontier Corporation shares are owned by institutional investors. 1.4% of Delek US Holdings shares are owned by insiders. Comparatively, 0.5% of HollyFrontier Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Delek US Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 2.7%. HollyFrontier Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 4.6%. Delek US Holdings pays out -25.9% of its earnings in the form of a dividend. HollyFrontier Corporation pays out 167.1% 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 has raised its dividend for 5 consecutive years. HollyFrontier Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

HollyFrontier Corporation beats Delek US Holdings on 10 of the 16 factors compared between the two stocks.

Delek US Holdings Company Profile

Delek US Holdings, Inc. is a diversified downstream energy company. The Company has a broad platform consisting of refining, logistics, retail and wholesale marketing, renewables and asphalt operations. It operates through five segments: refining, logistics, asphalt, renewable and retail. Its refining assets consist of refineries operated in Tyler and Big Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a combined nameplate crude throughput capacity of 302,000 barrels per day. The Logistics segment gathers, transports and stores crude oil, as well as markets, distributes transports and stores refined production in the southeast United States and West Texas. Its asphalt operations consist of 14 owned or operated asphalt terminals serving markets from Tennessee to the west coast. Its Renewables segment consists of plants in Texas and Arkansas that produce biodiesel fuel. The Company’s convenience store retail business operates approximately 300 convenience stores.

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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