Intrinsic value of HollyFrontier - HFC

Previous Close

$45.00

  Intrinsic Value

$1,068

stock screener

  Rating & Target

str. buy

+999%

Previous close

$45.00

 
Intrinsic value

$1,068

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of HFC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -20.41
  30.60
  28.04
  25.74
  23.66
  21.80
  20.12
  18.60
  17.24
  16.02
  14.92
  13.93
  13.03
  12.23
  11.51
  10.86
  10.27
  9.74
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.21
Revenue, $m
  10,536
  13,760
  17,618
  22,153
  27,394
  33,365
  40,077
  47,534
  55,731
  64,659
  74,304
  84,652
  95,685
  107,388
  119,745
  132,745
  146,379
  160,642
  175,532
  191,053
  207,213
  224,023
  241,499
  259,663
  278,537
  298,152
  318,539
  339,735
  361,779
  384,715
  408,589
Variable operating expenses, $m
 
  6,818
  8,673
  10,853
  13,374
  16,245
  19,472
  23,057
  26,998
  31,291
  35,928
  40,701
  46,006
  51,633
  57,574
  63,825
  70,380
  77,238
  84,397
  91,860
  99,630
  107,712
  116,115
  124,848
  133,923
  143,354
  153,156
  163,347
  173,946
  184,974
  196,453
Fixed operating expenses, $m
 
  5,648
  5,789
  5,934
  6,082
  6,234
  6,390
  6,550
  6,713
  6,881
  7,053
  7,230
  7,410
  7,596
  7,785
  7,980
  8,180
  8,384
  8,594
  8,809
  9,029
  9,254
  9,486
  9,723
  9,966
  10,215
  10,471
  10,732
  11,001
  11,276
  11,558
Total operating expenses, $m
  10,644
  12,466
  14,462
  16,787
  19,456
  22,479
  25,862
  29,607
  33,711
  38,172
  42,981
  47,931
  53,416
  59,229
  65,359
  71,805
  78,560
  85,622
  92,991
  100,669
  108,659
  116,966
  125,601
  134,571
  143,889
  153,569
  163,627
  174,079
  184,947
  196,250
  208,011
Operating income, $m
  -109
  1,294
  3,156
  5,366
  7,939
  10,887
  14,216
  17,927
  22,019
  26,487
  31,323
  36,721
  42,269
  48,159
  54,385
  60,940
  67,819
  75,020
  82,541
  90,385
  98,554
  107,056
  115,899
  125,092
  134,648
  144,583
  154,912
  165,655
  176,832
  188,465
  200,578
EBITDA, $m
  254
  1,813
  3,764
  6,077
  8,771
  11,856
  15,340
  19,223
  23,503
  28,176
  33,234
  38,668
  44,469
  50,629
  57,139
  63,993
  71,186
  78,714
  86,578
  94,779
  103,320
  112,209
  121,453
  131,064
  141,054
  151,440
  162,238
  173,469
  185,153
  197,313
  209,976
Interest expense (income), $m
  54
  78
  129
  190
  262
  345
  439
  545
  663
  793
  934
  1,086
  1,250
  1,424
  1,609
  1,804
  2,010
  2,225
  2,451
  2,686
  2,931
  3,187
  3,452
  3,728
  4,015
  4,314
  4,624
  4,946
  5,281
  5,629
  5,992
Earnings before tax, $m
  -172
  1,216
  3,027
  5,175
  7,677
  10,542
  13,777
  17,382
  21,356
  25,694
  30,389
  35,635
  41,019
  46,735
  52,776
  59,136
  65,809
  72,795
  80,091
  87,699
  95,623
  103,870
  112,446
  121,363
  130,633
  140,269
  150,288
  160,709
  171,551
  182,836
  194,587
Tax expense, $m
  19
  328
  817
  1,397
  2,073
  2,846
  3,720
  4,693
  5,766
  6,937
  8,205
  9,621
  11,075
  12,618
  14,250
  15,967
  17,769
  19,655
  21,624
  23,679
  25,818
  28,045
  30,361
  32,768
  35,271
  37,873
  40,578
  43,391
  46,319
  49,366
  52,538
Net income, $m
  -260
  888
  2,210
  3,778
  5,604
  7,696
  10,057
  12,689
  15,590
  18,757
  22,184
  26,013
  29,944
  34,117
  38,527
  43,169
  48,041
  53,140
  58,466
  64,020
  69,805
  75,825
  82,086
  88,595
  95,362
  102,396
  109,710
  117,318
  125,232
  133,470
  142,048

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,135
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,436
  10,843
  13,884
  17,457
  21,587
  26,293
  31,582
  37,458
  43,917
  50,952
  58,553
  66,708
  75,402
  84,624
  94,362
  104,606
  115,350
  126,589
  138,323
  150,554
  163,289
  176,535
  190,307
  204,620
  219,493
  234,950
  251,016
  267,718
  285,090
  303,164
  321,977
Adjusted assets (=assets-cash), $m
  8,301
  10,843
  13,884
  17,457
  21,587
  26,293
  31,582
  37,458
  43,917
  50,952
  58,553
  66,708
  75,402
  84,624
  94,362
  104,606
  115,350
  126,589
  138,323
  150,554
  163,289
  176,535
  190,307
  204,620
  219,493
  234,950
  251,016
  267,718
  285,090
  303,164
  321,977
Revenue / Adjusted assets
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
  1.269
Average production assets, $m
  4,361
  5,697
  7,294
  9,171
  11,341
  13,813
  16,592
  19,679
  23,072
  26,769
  30,762
  35,046
  39,614
  44,458
  49,574
  54,956
  60,601
  66,506
  72,670
  79,096
  85,786
  92,746
  99,981
  107,500
  115,314
  123,435
  131,875
  140,650
  149,776
  159,272
  169,156
Working capital, $m
  1,768
  826
  1,057
  1,329
  1,644
  2,002
  2,405
  2,852
  3,344
  3,880
  4,458
  5,079
  5,741
  6,443
  7,185
  7,965
  8,783
  9,639
  10,532
  11,463
  12,433
  13,441
  14,490
  15,580
  16,712
  17,889
  19,112
  20,384
  21,707
  23,083
  24,515
Total debt, $m
  2,235
  3,693
  5,435
  7,483
  9,850
  12,546
  15,576
  18,943
  22,644
  26,676
  31,031
  35,703
  40,685
  45,969
  51,549
  57,419
  63,575
  70,016
  76,739
  83,748
  91,044
  98,635
  106,526
  114,727
  123,250
  132,106
  141,312
  150,883
  160,836
  171,193
  181,973
Total liabilities, $m
  4,754
  6,213
  7,955
  10,003
  12,370
  15,066
  18,096
  21,463
  25,164
  29,196
  33,551
  38,223
  43,205
  48,489
  54,069
  59,939
  66,095
  72,536
  79,259
  86,268
  93,564
  101,155
  109,046
  117,247
  125,770
  134,626
  143,832
  153,403
  163,356
  173,713
  184,493
Total equity, $m
  4,681
  4,630
  5,928
  7,454
  9,218
  11,227
  13,485
  15,994
  18,753
  21,757
  25,002
  28,484
  32,197
  36,134
  40,292
  44,667
  49,254
  54,054
  59,064
  64,287
  69,724
  75,380
  81,261
  87,373
  93,724
  100,324
  107,184
  114,316
  121,733
  129,451
  137,484
Total liabilities and equity, $m
  9,435
  10,843
  13,883
  17,457
  21,588
  26,293
  31,581
  37,457
  43,917
  50,953
  58,553
  66,707
  75,402
  84,623
  94,361
  104,606
  115,349
  126,590
  138,323
  150,555
  163,288
  176,535
  190,307
  204,620
  219,494
  234,950
  251,016
  267,719
  285,089
  303,164
  321,977
Debt-to-equity ratio
  0.477
  0.800
  0.920
  1.000
  1.070
  1.120
  1.160
  1.180
  1.210
  1.230
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
  1.320
  1.320
  1.320
  1.320
  1.320
  1.320
  1.320
Adjusted equity ratio
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -260
  888
  2,210
  3,778
  5,604
  7,696
  10,057
  12,689
  15,590
  18,757
  22,184
  26,013
  29,944
  34,117
  38,527
  43,169
  48,041
  53,140
  58,466
  64,020
  69,805
  75,825
  82,086
  88,595
  95,362
  102,396
  109,710
  117,318
  125,232
  133,470
  142,048
Depreciation, amort., depletion, $m
  363
  519
  607
  712
  832
  970
  1,124
  1,295
  1,484
  1,689
  1,911
  1,947
  2,201
  2,470
  2,754
  3,053
  3,367
  3,695
  4,037
  4,394
  4,766
  5,153
  5,554
  5,972
  6,406
  6,857
  7,326
  7,814
  8,321
  8,848
  9,398
Funds from operations, $m
  548
  1,406
  2,817
  4,490
  6,436
  8,665
  11,181
  13,984
  17,074
  20,446
  24,095
  27,960
  32,145
  36,587
  41,281
  46,222
  51,408
  56,835
  62,503
  68,414
  74,571
  80,977
  87,640
  94,567
  101,768
  109,254
  117,037
  125,131
  133,553
  142,318
  151,446
Change in working capital, $m
  -54
  193
  231
  272
  315
  358
  403
  447
  492
  536
  579
  621
  662
  702
  741
  780
  818
  856
  893
  931
  970
  1,009
  1,049
  1,090
  1,132
  1,177
  1,223
  1,272
  1,323
  1,376
  1,432
Cash from operations, $m
  602
  1,213
  2,586
  4,218
  6,122
  8,307
  10,778
  13,537
  16,582
  19,910
  23,516
  27,340
  31,483
  35,884
  40,539
  45,442
  50,590
  55,979
  61,610
  67,483
  73,601
  79,969
  86,592
  93,478
  100,636
  108,077
  115,814
  123,860
  132,230
  140,942
  150,013
Maintenance CAPEX, $m
  0
  -242
  -316
  -405
  -510
  -630
  -767
  -922
  -1,093
  -1,282
  -1,487
  -1,709
  -1,947
  -2,201
  -2,470
  -2,754
  -3,053
  -3,367
  -3,695
  -4,037
  -4,394
  -4,766
  -5,153
  -5,554
  -5,972
  -6,406
  -6,857
  -7,326
  -7,814
  -8,321
  -8,848
New CAPEX, $m
  -480
  -1,336
  -1,597
  -1,877
  -2,170
  -2,472
  -2,779
  -3,087
  -3,394
  -3,696
  -3,993
  -4,284
  -4,568
  -4,845
  -5,116
  -5,382
  -5,644
  -5,905
  -6,165
  -6,426
  -6,690
  -6,959
  -7,235
  -7,520
  -7,814
  -8,120
  -8,440
  -8,775
  -9,126
  -9,495
  -9,884
Cash from investing activities, $m
  -802
  -1,578
  -1,913
  -2,282
  -2,680
  -3,102
  -3,546
  -4,009
  -4,487
  -4,978
  -5,480
  -5,993
  -6,515
  -7,046
  -7,586
  -8,136
  -8,697
  -9,272
  -9,860
  -10,463
  -11,084
  -11,725
  -12,388
  -13,074
  -13,786
  -14,526
  -15,297
  -16,101
  -16,940
  -17,816
  -18,732
Free cash flow, $m
  -200
  -366
  672
  1,935
  3,442
  5,205
  7,232
  9,528
  12,095
  14,932
  18,036
  21,347
  24,968
  28,839
  32,953
  37,306
  41,892
  46,708
  51,750
  57,020
  62,517
  68,244
  74,204
  80,403
  86,849
  93,550
  100,516
  107,758
  115,290
  123,126
  131,281
Issuance/(repayment) of debt, $m
  1,188
  1,458
  1,742
  2,047
  2,367
  2,696
  3,031
  3,367
  3,701
  4,031
  4,355
  4,672
  4,982
  5,284
  5,580
  5,870
  6,156
  6,440
  6,724
  7,008
  7,297
  7,590
  7,891
  8,201
  8,523
  8,857
  9,206
  9,571
  9,954
  10,356
  10,780
Issuance/(repurchase) of shares, $m
  -8
  196
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,077
  1,654
  1,742
  2,047
  2,367
  2,696
  3,031
  3,367
  3,701
  4,031
  4,355
  4,672
  4,982
  5,284
  5,580
  5,870
  6,156
  6,440
  6,724
  7,008
  7,297
  7,590
  7,891
  8,201
  8,523
  8,857
  9,206
  9,571
  9,954
  10,356
  10,780
Total cash flow (excl. dividends), $m
  878
  1,289
  2,414
  3,983
  5,809
  7,901
  10,263
  12,895
  15,797
  18,964
  22,391
  26,019
  29,950
  34,123
  38,533
  43,176
  48,048
  53,148
  58,474
  64,029
  69,814
  75,834
  82,095
  88,605
  95,372
  102,407
  109,721
  117,329
  125,244
  133,482
  142,061
Retained Cash Flow (-), $m
  572
  -1,084
  -1,298
  -1,526
  -1,764
  -2,009
  -2,258
  -2,509
  -2,758
  -3,004
  -3,246
  -3,482
  -3,712
  -3,938
  -4,158
  -4,374
  -4,588
  -4,799
  -5,010
  -5,223
  -5,437
  -5,656
  -5,881
  -6,112
  -6,351
  -6,600
  -6,860
  -7,132
  -7,418
  -7,718
  -8,033
Prev. year cash balance distribution, $m
 
  1,135
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,340
  1,116
  2,457
  4,045
  5,892
  8,004
  10,386
  13,038
  15,960
  19,146
  22,537
  26,237
  30,185
  34,375
  38,802
  43,461
  48,348
  53,464
  58,806
  64,376
  70,178
  76,215
  82,493
  89,021
  95,807
  102,861
  110,197
  117,826
  125,765
  134,028
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,285
  1,021
  2,138
  3,331
  4,567
  5,809
  7,017
  8,149
  9,168
  10,037
  10,703
  11,196
  11,477
  11,540
  11,392
  11,044
  10,520
  9,846
  9,054
  8,180
  7,259
  6,324
  5,407
  4,534
  3,727
  3,001
  2,365
  1,823
  1,373
  1,009
Current shareholders' claim on cash, %
  100
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9
  96.9

HollyFrontier Corporation is an independent petroleum refiner. The Company produces various light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. It segments include Refining and Holly Energy Partners, L.P. (HEP). The Refining segment includes the operations of the Company's El Dorado, Kansas (the El Dorado Refinery); refinery facilities located in Tulsa, Oklahoma (collectively, the Tulsa Refineries); a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the Navajo Refinery); refinery located in Cheyenne, Wyoming (the Cheyenne Refinery); a refinery in Woods Cross, Utah (the Woods Cross Refinery), and HollyFrontier Asphalt Company (HFC Asphalt). The HEP segment involves all of the operations of HEP. HEP is a limited partnership, which owns and operates logistic assets.

FINANCIAL RATIOS  of  HollyFrontier (HFC)

Valuation Ratios
P/E Ratio -30.7
Price to Sales 0.8
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 13.3
Price to Free Cash Flow 65.4
Growth Rates
Sales Growth Rate -20.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -29%
Cap. Spend. - 3 Yr. Gr. Rate 2.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 47.7%
Total Debt to Equity 47.7%
Interest Coverage -2
Management Effectiveness
Return On Assets -2.2%
Ret/ On Assets - 3 Yr. Avg. 3.3%
Return On Total Capital -3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.9%
Return On Equity -5.2%
Return On Equity - 3 Yr. Avg. 4.5%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 19.5%
Gross Margin - 3 Yr. Avg. 17.4%
EBITDA Margin 2.3%
EBITDA Margin - 3 Yr. Avg. 6.3%
Operating Margin -1%
Oper. Margin - 3 Yr. Avg. 3.6%
Pre-Tax Margin -1.6%
Pre-Tax Margin - 3 Yr. Avg. 3.3%
Net Profit Margin -2.5%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate -11%
Eff/ Tax Rate - 3 Yr. Avg. 17.6%
Payout Ratio -90%

HFC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HFC stock intrinsic value calculation we used $10536 million for the last fiscal year's total revenue generated by HollyFrontier. The default revenue input number comes from 2016 income statement of HollyFrontier. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HFC stock valuation model: a) initial revenue growth rate of 30.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for HFC is calculated based on our internal credit rating of HollyFrontier, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of HollyFrontier.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HFC stock the variable cost ratio is equal to 50%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5510 million in the base year in the intrinsic value calculation for HFC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for HollyFrontier.

Corporate tax rate of 27% is the nominal tax rate for HollyFrontier. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HFC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HFC are equal to 41.4%.

Life of production assets of 18 years is the average useful life of capital assets used in HollyFrontier operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HFC is equal to 6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4681 million for HollyFrontier - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 178.251 million for HollyFrontier is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of HollyFrontier at the current share price and the inputted number of shares is $8.0 billion.

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CVX Chevron 112.59 18.50  str.sell
CLMT Calumet Specia 7.00 1.77  str.sell

COMPANY NEWS

▶ HollyFrontier Misses Consensus on 4th-Quarter Earnings   [Feb-22-18 11:00AM  GuruFocus.com]
▶ HollyFrontier misses Street 4Q forecasts   [06:53AM  Associated Press]
▶ HollyFrontier Corporation Announces Regular Cash Dividend   [Feb-14-18 05:15PM  Business Wire]
▶ Oil Stocks: What to Watch in 2018   [Feb-03-18 09:02PM  Motley Fool]
▶ How Analysts Rate Phillips 66 ahead of 4Q Earnings   [Jan-26-18 10:31AM  Market Realist]
▶ What to Expect from Phillips 66s 4Q17 Results   [Jan-25-18 08:14AM  Market Realist]
▶ Why Has Short Interest in Valero Fallen ahead of Earnings?   [Jan-24-18 10:31AM  Market Realist]
▶ Whats Valeros Stock Price Forecast?   [09:02AM  Market Realist]
▶ What Wall Street Is Expecting for Valero in 4Q17   [Jan-23-18 02:00PM  Market Realist]
▶ Top Stocks in Oil   [Jan-20-18 10:32AM  Motley Fool]
▶ Which Refining and Marketing Energy Stocks Fell This Week?   [Jan-19-18 09:30AM  Market Realist]
▶ Marathon Petroleums Moving Averages ahead of Q4 Earnings   [Jan-18-18 09:02AM  Market Realist]
▶ Marathon Petroleums 4Q17 Estimates: Are Expectations High?   [Jan-17-18 03:29PM  Market Realist]
▶ Oil Refinery Stocks Are Up 30%   [Jan-08-18 08:15PM  Motley Fool]
▶ Is Holly Energy Partners, L.P. a Buy in 2018?   [Jan-04-18 09:03AM  Motley Fool]
▶ The 4 Best Oil Stocks of 2017   [Jan-03-18 04:33PM  Motley Fool]
▶ 7 Hot Momentum Stocks to Watch in 2018   [Dec-27-17 08:34AM  Zacks]
▶ Do Marathon Petroleums Valuations Stand above Peer Averages?   [Dec-22-17 09:00AM  Market Realist]
▶ Refining and Marketing Gainers: HFC, CVRR, PBF, INT, and PSX   [Dec-14-17 12:55PM  Market Realist]
▶ Here's How Holly Energy Partners Crushed It in 2017   [Dec-13-17 04:33PM  Motley Fool]
▶ A Look at Valeros Short Interest since 3Q17   [Nov-21-17 10:30AM  Market Realist]
▶ What Wall Street Analysts Recommend for HFC, PARR, and CVE   [Nov-10-17 10:33AM  Market Realist]
▶ HollyFrontier Corporation Announces Regular Cash Dividend   [Nov-08-17 04:15PM  Business Wire]
▶ Upgrade Draws Well-Deserved Attention to HollyFrontier   [Nov-02-17 03:50PM  TheStreet.com]
▶ Stocks To Watch: Hollyfrontier Sees RS Rating Rise To 93   [03:00AM  Investor's Business Daily]
▶ HollyFrontier beats Street 3Q forecasts   [06:40AM  Associated Press]
Financial statements of HFC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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