DINO - HF Sinclair: Not Cheap Enough To Benefit From A Refining Upturn
2024-07-17 00:49:45 ET
Summary
- HF Sinclair shares have underperformed, down 20% in the past quarter and up just 7% in the past year, as crack spreads have narrowed.
- DINO operates 7 refineries with a 678,000-bpd capacity, along with renewable diesel, lubricant, and midstream assets.
- In a $20-25 crack spread environment, the Company has nearly $1 billion in free cash flow, and refining margins will be the primary driver of shares.
- Despite the potential for crack spreads to rise, DINO's lower capital returns compared to peers like Marathon Petroleum make it a hold.
Shares of HF Sinclair (DINO), the former Holly Frontier, have been on a steady downtrend over the past quarter, losing about 20% and leaving them up just 7% over the past year. Underperformance has stretched back for longer; shares are up just 2.5% over the past five years, while other refinery stocks like Marathon Petroleum ( MPC ) have surged. Given this relative underperformance, value investors may wonder if DINO is now an attractive buy. While I like the refining sector, I see better plays than DINO....
HF Sinclair: Not Cheap Enough To Benefit From A Refining Upturn