Is Trending Stock HF Sinclair Corporation (DINO) a buy it now?
HF Sinclair (DINO) is one of the most viewed stocks by Zacks.com visitors lately. So it might be worth looking at some of the factors that could affect the stock’s short-term performance.
Shares of this independent energy company have returned +5% over the past month compared to the -11.7% change in the Zacks S&P 500 composite. The industry Zacks Alternative Energy – Other, to which HF Sinclair belongs, has lost 11.4% over 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.
Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.
HF Sinclair is expected to post earnings of $4.63 per share for the current quarter, representing a year-over-year change of +261.7%. Over the past 30 days, the Zacks consensus estimate has changed by +10.2%.
The current year earnings consensus estimate of $14.16 indicates a year-over-year change of +831.6%. This estimate has changed by +5.7% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $9.15 indicates a -35.4% change from what HF Sinclair is expected to report a year ago. Over the past month, the estimate has changed by +7.7%.
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.
For HF Sinclair, the current quarter sales consensus estimate of $8.47 billion indicates a year-over-year change of +80.7%. For the current and future fiscal years, the estimates of $35.26 billion and $31.57 billion indicate variations of +91.7% and -10.4%, 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.
Without considering the valuation of a stock, no investment decision can be effective. Crucial to predicting a stock’s future price performance is whether its current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects.
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 valued, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which assesses both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on. ), which helps determine whether a stock is overvalued, correctly valued, 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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.