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HollyFrontier to Reward Shareholders With $1B Share Buyback

Zacks Equity Research
Updated

HollyFrontier Corporation HFC recently declared that its board has approved a new share buyback program, authorizing it to repurchase shares worth $1 billion. The new program is designed to replace all existing ones, which had only $43.6 million left. Starting from the third quarter, the company had repurchased around 1.2 million shares until Sep 13.

Per the authorization, Dallas, TX-based HollyFrontier is allowed to perform repurchases through open-market buybacks and privately-negotiated agreements.

Notably, the latest buyback program constitutes 8.1% of HollyFrontier’s market cap. The move reflects its dedication to enhance shareholder value through returning its surplus free cash flow to its shareholders. In the trailing 12 months, the company’s free cash flow surged 35.6% to $923 million. The company reached its current form following the 2011 merger between Holly Corp. and Frontier Oil. Since then, the company has returned around $4.7 billion to its shareholders, in cash.

As of now, HollyFrontier has about 174.7 million shares outstanding. A share repurchase by the company would lead to a lesser number of outstanding shares, escalating its earnings per share ratio, even if profits remain the same.

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The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.83, reflecting a 60.5% year-over-year increase. Also, HollyFrontier pulled off an average positive earnings surprise of 27.6% over the trailing four quarters.

Price Performance

HollyFrontier’s shares have gained 114% in the past year compared with 43.1% collective growth of the industry it belongs to.

 

 

Zacks Rank & Stocks to Consider

Currently, HollyFrontier has a Zacks Rank #3 (Hold). Investors interested in the Oil and Gas sector can opt for some better-ranked stocks like Petroleo Brasileiro S.A. or Petrobras PBR, Galp Energia SGPS SA GLPEY and RGC Resources Inc. RGCO. While Petrobras sports a Zacks Rank #1 (Strong Buy),  Galp Energia and RGC Resources carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rio de Janeiro, Brazil-based Petrobras is an integrated energy company. The company’s top line for 2018 is likely to improve 7.5% year over year. In the last four reported quarters, it delivered an average positive earnings surprise of 10.4%.

Lisbon, Portugal-based Galp Energia’s third-quarter earnings are expected to surge 128.6% year over year.

Roanoke, VA-based RGC Resources’ full-year earnings are expected to grow 5.8%. In the last reported quarter, the company delivered an earnings surprise of 40%.

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Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
 
HollyFrontier Corporation (HFC) : Free Stock Analysis Report
 
Galp Energia SGPS SA (GLPEY) : Free Stock Analysis Report
 
RGC Resources Inc. (RGCO) : Free Stock Analysis Report
 
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