HF Sinclair Corp (DINO, Financial) recently experienced a daily loss of -1.78%, contributing to a 3-month decline of -3.26%. Despite these fluctuations, the company boasts a robust Earnings Per Share (EPS) of 11.56. Investors and analysts are keen to determine whether this stock is fairly valued in the market. This article delves into a detailed valuation analysis to uncover the true worth of HF Sinclair (DINO).
Company Overview
HF Sinclair Corp operates as an integrated petroleum refiner with significant capacity and reach, including a renewable diesel production capability and a substantial marketing network. With a current stock price of $56.81 and a Fair Value (GF Value) of $61.26, it's pivotal to analyze whether the stock is trading at a fair valuation. The following income breakdown offers insights into the company's financial performance.
Understanding the GF Value
The GF Value is a unique measure that estimates the intrinsic value of a stock. It is computed by considering historical trading multiples, an adjustment factor based on past performance and growth, and future business performance projections. The GF Value Line serves as a benchmark for the stock's ideal fair trading value. When a stock's price significantly deviates from this line, it indicates potential overvaluation or undervaluation, influencing future returns. Currently, HF Sinclair (DINO, Financial) appears to be fairly valued, suggesting that its market price aligns closely with our calculated GF Value.
Financial Strength
Assessing a company's financial strength is crucial to avoid the risk of permanent capital loss. HF Sinclair's cash-to-debt ratio of 0.63 ranks better than 54.07% of its peers in the Oil & Gas industry, indicating a strong financial position. This is further substantiated by the company's financial strength rating of 8 out of 10. The following chart illustrates HF Sinclair's cash and debt dynamics over recent years.
Profitability and Growth
Investing in profitable companies, particularly those with a track record of consistent profitability, is typically less risky. HF Sinclair has been profitable 8 out of the past 10 years, with a recent operating margin of 9.33%, which ranks well within the Oil & Gas industry. The company's profitability rank is a strong 8 out of 10. Moreover, growth is a key valuation driver, and HF Sinclair's 3-year average annual revenue growth rate of 21.8% outperforms 72.56% of its industry peers, signaling potential for value creation for shareholders.
ROIC vs. WACC
A comparison of Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) can reveal a company's profitability relative to its capital costs. HF Sinclair's ROIC of 17.57 significantly exceeds its WACC of 6.87, indicating efficient capital use. The historical comparison of ROIC vs. WACC is depicted below.
Conclusion
In conclusion, HF Sinclair (DINO, Financial) is assessed as fairly valued based on our analysis. The company exhibits strong financial health and profitability, with growth rates surpassing many competitors in the Oil & Gas industry. For a deeper understanding of HF Sinclair's financials, investors can explore the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
