HF Sinclair (DINO) recently made it to Zacks.com’s Most Wanted Stock list. Therefore, you may want to consider some of the key factors that may influence the stock’s performance in the near future.
Shares of this independent energy company have returned +23.5% over the past month compared to the +2.9% change in the Zacks S&P 500 composite. Industry Zacks Alternative Energy – Other, to which HF Sinclair belongs , gained 1.6% during this period. Now the key question is: where could the stock be heading in the near term?
While press releases or rumors about a substantial change in a company’s trading outlook usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
At Zacks, we prioritize evaluating change in a company’s future earnings projection over anything else. This is because we believe that the present value of its future income stream is what determines the fair value of its stock.
We basically look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest trading trends. And if earnings estimates increase for a company, the fair value of its shares increases. A higher fair value than the current market price stimulates investors’ interest in buying the stock, causing its price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, HF Sinclair is expected to post earnings of $4.20 per share, indicating a change of +228.1% from the prior year quarter. The Zacks consensus estimate has changed -0.7% over the past 30 days.
The current year earnings consensus estimate of $14.38 indicates a year-over-year change of +846.1%. This estimate has changed by -2.8% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $9.97 indicates a -30.7% change from what HF Sinclair is expected to report a year ago. Over the past month, the estimate has changed by +8.5%.
With an impressive externally audited balance sheet, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance because it effectively harnesses the power of earnings estimate revisions. The magnitude of the recent change in the consensus estimate, plus three more factors related to earnings estimatesresulted in a Zacks Rank #1 (Strong Buy) for HF Sinclair.
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Revenue Growth Forecasts
Although earnings growth is arguably the most superior indicator of a company’s financial health, nothing as such happens if a company is unable to increase its revenue. After all, it is almost impossible for a company to increase its profits for an extended period of time without increasing its revenue. It is therefore important to know the potential revenue growth of a business.
In the case of HF Sinclair, the consensus sales estimate of $8.47 billion for the current quarter indicates a year-over-year change of +80.7%. Estimates of $34.19 billion and $29.1 billion for the current and next fiscal year indicate changes of +85.9% and -14.9%, respectively.
Latest reported results and history of surprises
HF Sinclair reported revenue of $11.16 billion in the last quarter, representing a year-over-year change of +143.9%. EPS of $5.59 for the same period versus $0.87 a year ago.
Compared to the Zacks consensus estimate of $7.97 billion, reported revenue is a surprise +40.13%. Surprise EPS was +24.22%.
In the past four quarters, HF Sinclair has exceeded consensus EPS estimates three times. The company has exceeded consensus earnings estimates every time during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values help determine whether its stock is fairly priced, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
HF Sinclair is rated A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the rating metrics that led to this rating.
The facts discussed here and much more information on Zacks.com might help determine whether it’s worth paying attention to the market buzz about HF Sinclair. However, its Zacks No. 1 ranking suggests it could outperform the broader market in the near term.
Just Released: Zacks Reveals Top 5 EV Stocks for 2022
For several months now, electric vehicles have been disrupting an $82 billion auto industry. And this disruption is only getting worse thanks to exorbitant gas prices. Even titans of the financial sector, including George Soros, Jeff Bezos and Ray Dalio, have invested in this unstoppable wave. You don’t want to sit on your hands as EV stocks burst and soar to new heights. In a new free report, Zacks reveals the top 5 EV stocks for investors. Next year, don’t look back on today wishing you had this opportunity.>> Send me my free report revealing the top 5 electric vehicle stocks
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.