Intrinsic value of HollyFrontier - HFC

Previous Close

$67.95

  Intrinsic Value

$622.50

stock screener

  Rating & Target

str. buy

+816%

Previous close

$67.95

 
Intrinsic value

$622.50

 
Up/down potential

+816%

 
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

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
Revenue, $m
  18,427
  23,378
  29,149
  35,770
  43,261
  51,632
  60,881
  71,001
  81,978
  93,794
  106,431
  119,869
  134,089
  149,076
  164,817
  181,304
  198,533
  216,505
  235,227
  254,710
  274,970
  296,030
  317,915
  340,658
  364,294
  388,863
  414,412
  440,988
  468,646
  497,442
Variable operating expenses, $m
  13,373
  16,894
  20,998
  25,707
  31,034
  36,987
  43,565
  50,762
  58,568
  66,971
  75,690
  85,246
  95,359
  106,017
  117,211
  128,936
  141,189
  153,970
  167,284
  181,140
  195,548
  210,525
  226,089
  242,263
  259,072
  276,545
  294,714
  313,614
  333,283
  353,762
Fixed operating expenses, $m
  3,077
  3,145
  3,214
  3,285
  3,357
  3,431
  3,506
  3,584
  3,662
  3,743
  3,825
  3,910
  3,996
  4,083
  4,173
  4,265
  4,359
  4,455
  4,553
  4,653
  4,755
  4,860
  4,967
  5,076
  5,188
  5,302
  5,419
  5,538
  5,660
  5,784
Total operating expenses, $m
  16,450
  20,039
  24,212
  28,992
  34,391
  40,418
  47,071
  54,346
  62,230
  70,714
  79,515
  89,156
  99,355
  110,100
  121,384
  133,201
  145,548
  158,425
  171,837
  185,793
  200,303
  215,385
  231,056
  247,339
  264,260
  281,847
  300,133
  319,152
  338,943
  359,546
Operating income, $m
  1,977
  3,339
  4,937
  6,778
  8,870
  11,214
  13,810
  16,656
  19,747
  23,080
  26,916
  30,713
  34,735
  38,975
  43,432
  48,102
  52,985
  58,080
  63,390
  68,917
  74,667
  80,645
  86,859
  93,319
  100,034
  107,017
  114,280
  121,837
  129,703
  137,896
EBITDA, $m
  2,677
  4,156
  5,889
  7,886
  10,153
  12,693
  15,506
  18,589
  21,939
  25,548
  29,412
  33,524
  37,879
  42,472
  47,298
  52,354
  57,641
  63,158
  68,906
  74,891
  81,115
  87,587
  94,315
  101,308
  108,578
  116,137
  123,998
  132,179
  140,694
  149,562
Interest expense (income), $m
  54
  135
  219
  319
  436
  569
  720
  889
  1,076
  1,280
  1,501
  1,740
  1,995
  2,266
  2,553
  2,855
  3,173
  3,505
  3,853
  4,215
  4,593
  4,986
  5,395
  5,820
  6,261
  6,720
  7,197
  7,693
  8,208
  8,744
  9,302
Earnings before tax, $m
  1,842
  3,120
  4,617
  6,343
  8,301
  10,493
  12,921
  15,580
  18,468
  21,579
  25,176
  28,719
  32,469
  36,423
  40,577
  44,930
  49,480
  54,227
  59,174
  64,324
  69,680
  75,250
  81,040
  87,058
  93,314
  99,820
  106,587
  113,629
  120,959
  128,594
Tax expense, $m
  497
  842
  1,247
  1,713
  2,241
  2,833
  3,489
  4,207
  4,986
  5,826
  6,798
  7,754
  8,767
  9,834
  10,956
  12,131
  13,360
  14,641
  15,977
  17,367
  18,814
  20,317
  21,881
  23,506
  25,195
  26,951
  28,778
  30,680
  32,659
  34,720
Net income, $m
  1,344
  2,277
  3,371
  4,630
  6,059
  7,660
  9,432
  11,373
  13,481
  15,752
  18,379
  20,965
  23,702
  26,589
  29,621
  32,799
  36,120
  39,586
  43,197
  46,956
  50,867
  54,932
  59,159
  63,552
  68,119
  72,869
  77,808
  82,949
  88,300
  93,874

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  13,824
  17,538
  21,867
  26,834
  32,454
  38,733
  45,672
  53,264
  61,499
  70,363
  79,843
  89,924
  100,592
  111,835
  123,643
  136,012
  148,937
  162,419
  176,464
  191,080
  206,279
  222,078
  238,496
  255,557
  273,288
  291,720
  310,887
  330,824
  351,572
  373,175
Adjusted assets (=assets-cash), $m
  13,824
  17,538
  21,867
  26,834
  32,454
  38,733
  45,672
  53,264
  61,499
  70,363
  79,843
  89,924
  100,592
  111,835
  123,643
  136,012
  148,937
  162,419
  176,464
  191,080
  206,279
  222,078
  238,496
  255,557
  273,288
  291,720
  310,887
  330,824
  351,572
  373,175
Revenue / Adjusted assets
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
  1.333
Average production assets, $m
  7,260
  9,211
  11,485
  14,093
  17,045
  20,343
  23,987
  27,974
  32,299
  36,955
  41,934
  47,228
  52,831
  58,736
  64,938
  71,434
  78,222
  85,303
  92,679
  100,356
  108,338
  116,636
  125,258
  134,219
  143,532
  153,212
  163,278
  173,749
  184,646
  195,992
Working capital, $m
  1,308
  1,660
  2,070
  2,540
  3,072
  3,666
  4,323
  5,041
  5,820
  6,659
  7,557
  8,511
  9,520
  10,584
  11,702
  12,873
  14,096
  15,372
  16,701
  18,084
  19,523
  21,018
  22,572
  24,187
  25,865
  27,609
  29,423
  31,310
  33,274
  35,318
Total debt, $m
  4,062
  5,912
  8,067
  10,541
  13,340
  16,467
  19,922
  23,703
  27,804
  32,219
  36,940
  41,960
  47,272
  52,871
  58,752
  64,911
  71,348
  78,062
  85,057
  92,335
  99,905
  107,772
  115,949
  124,445
  133,275
  142,454
  151,999
  161,928
  172,261
  183,019
Total liabilities, $m
  6,884
  8,734
  10,890
  13,363
  16,162
  19,289
  22,745
  26,525
  30,626
  35,041
  39,762
  44,782
  50,095
  55,694
  61,574
  67,734
  74,170
  80,885
  87,879
  95,158
  102,727
  110,595
  118,771
  127,267
  136,098
  145,277
  154,822
  164,750
  175,083
  185,841
Total equity, $m
  6,939
  8,804
  10,977
  13,471
  16,292
  19,444
  22,927
  26,739
  30,872
  35,322
  40,081
  45,142
  50,497
  56,141
  62,069
  68,278
  74,766
  81,534
  88,585
  95,922
  103,552
  111,483
  119,725
  128,290
  137,191
  146,444
  156,065
  166,074
  176,489
  187,334
Total liabilities and equity, $m
  13,823
  17,538
  21,867
  26,834
  32,454
  38,733
  45,672
  53,264
  61,498
  70,363
  79,843
  89,924
  100,592
  111,835
  123,643
  136,012
  148,936
  162,419
  176,464
  191,080
  206,279
  222,078
  238,496
  255,557
  273,289
  291,721
  310,887
  330,824
  351,572
  373,175
Debt-to-equity ratio
  0.590
  0.670
  0.730
  0.780
  0.820
  0.850
  0.870
  0.890
  0.900
  0.910
  0.920
  0.930
  0.940
  0.940
  0.950
  0.950
  0.950
  0.960
  0.960
  0.960
  0.960
  0.970
  0.970
  0.970
  0.970
  0.970
  0.970
  0.980
  0.980
  0.980
Adjusted equity ratio
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,344
  2,277
  3,371
  4,630
  6,059
  7,660
  9,432
  11,373
  13,481
  15,752
  18,379
  20,965
  23,702
  26,589
  29,621
  32,799
  36,120
  39,586
  43,197
  46,956
  50,867
  54,932
  59,159
  63,552
  68,119
  72,869
  77,808
  82,949
  88,300
  93,874
Depreciation, amort., depletion, $m
  701
  817
  952
  1,107
  1,283
  1,479
  1,696
  1,934
  2,191
  2,468
  2,496
  2,811
  3,145
  3,496
  3,865
  4,252
  4,656
  5,078
  5,517
  5,974
  6,449
  6,943
  7,456
  7,989
  8,544
  9,120
  9,719
  10,342
  10,991
  11,666
Funds from operations, $m
  2,045
  3,094
  4,323
  5,738
  7,343
  9,140
  11,128
  13,307
  15,672
  18,221
  20,875
  23,776
  26,847
  30,085
  33,487
  37,051
  40,776
  44,664
  48,714
  52,930
  57,315
  61,875
  66,615
  71,541
  76,663
  81,988
  87,527
  93,291
  99,291
  105,540
Change in working capital, $m
  296
  352
  410
  470
  532
  594
  657
  719
  779
  839
  897
  954
  1,010
  1,064
  1,118
  1,171
  1,223
  1,276
  1,329
  1,383
  1,438
  1,495
  1,554
  1,615
  1,678
  1,744
  1,814
  1,887
  1,964
  2,045
Cash from operations, $m
  1,749
  2,743
  3,913
  5,267
  6,811
  8,545
  10,472
  12,588
  14,893
  17,382
  19,978
  22,822
  25,837
  29,021
  32,369
  35,880
  39,553
  43,387
  47,385
  51,547
  55,877
  60,380
  65,061
  69,927
  74,985
  80,244
  85,713
  91,404
  97,327
  103,495
Maintenance CAPEX, $m
  -335
  -432
  -548
  -684
  -839
  -1,015
  -1,211
  -1,428
  -1,665
  -1,923
  -2,200
  -2,496
  -2,811
  -3,145
  -3,496
  -3,865
  -4,252
  -4,656
  -5,078
  -5,517
  -5,974
  -6,449
  -6,943
  -7,456
  -7,989
  -8,544
  -9,120
  -9,719
  -10,342
  -10,991
New CAPEX, $m
  -1,638
  -1,951
  -2,274
  -2,609
  -2,952
  -3,298
  -3,644
  -3,987
  -4,325
  -4,656
  -4,979
  -5,294
  -5,603
  -5,905
  -6,202
  -6,496
  -6,788
  -7,081
  -7,376
  -7,676
  -7,983
  -8,297
  -8,623
  -8,961
  -9,313
  -9,680
  -10,066
  -10,471
  -10,897
  -11,346
Cash from investing activities, $m
  -1,973
  -2,383
  -2,822
  -3,293
  -3,791
  -4,313
  -4,855
  -5,415
  -5,990
  -6,579
  -7,179
  -7,790
  -8,414
  -9,050
  -9,698
  -10,361
  -11,040
  -11,737
  -12,454
  -13,193
  -13,957
  -14,746
  -15,566
  -16,417
  -17,302
  -18,224
  -19,186
  -20,190
  -21,239
  -22,337
Free cash flow, $m
  -224
  360
  1,091
  1,975
  3,020
  4,233
  5,617
  7,173
  8,903
  10,803
  12,799
  15,031
  17,423
  19,971
  22,671
  25,519
  28,513
  31,650
  34,931
  38,354
  41,921
  45,634
  49,495
  53,510
  57,683
  62,020
  66,528
  71,214
  76,088
  81,159
Issuance/(repayment) of debt, $m
  1,563
  1,850
  2,156
  2,474
  2,799
  3,127
  3,455
  3,781
  4,101
  4,415
  4,721
  5,020
  5,313
  5,599
  5,881
  6,159
  6,437
  6,714
  6,994
  7,279
  7,569
  7,868
  8,176
  8,497
  8,830
  9,179
  9,545
  9,929
  10,333
  10,758
Issuance/(repurchase) of shares, $m
  224
  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  
  1,787
  1,850
  2,156
  2,474
  2,799
  3,127
  3,455
  3,781
  4,101
  4,415
  4,721
  5,020
  5,313
  5,599
  5,881
  6,159
  6,437
  6,714
  6,994
  7,279
  7,569
  7,868
  8,176
  8,497
  8,830
  9,179
  9,545
  9,929
  10,333
  10,758
Total cash flow (excl. dividends), $m
  1,563
  2,209
  3,247
  4,449
  5,819
  7,360
  9,072
  10,954
  13,004
  15,218
  17,520
  20,051
  22,736
  25,570
  28,552
  31,678
  34,949
  38,365
  41,925
  45,633
  49,490
  53,501
  57,672
  62,007
  66,513
  71,199
  76,072
  81,143
  86,421
  91,917
Retained Cash Flow (-), $m
  -1,569
  -1,865
  -2,173
  -2,493
  -2,821
  -3,152
  -3,483
  -3,811
  -4,134
  -4,450
  -4,759
  -5,061
  -5,355
  -5,644
  -5,928
  -6,209
  -6,488
  -6,768
  -7,051
  -7,337
  -7,630
  -7,931
  -8,242
  -8,565
  -8,901
  -9,253
  -9,621
  -10,009
  -10,416
  -10,844
Prev. year cash balance distribution, $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 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
  -6
  345
  1,074
  1,955
  2,998
  4,208
  5,589
  7,143
  8,870
  10,768
  12,761
  14,991
  17,381
  19,926
  22,624
  25,470
  28,461
  31,596
  34,875
  38,295
  41,860
  45,570
  49,430
  53,442
  57,612
  61,946
  66,451
  71,134
  76,005
  81,072
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
  -6
  316
  935
  1,610
  2,324
  3,054
  3,776
  4,465
  5,095
  5,645
  6,060
  6,397
  6,608
  6,690
  6,642
  6,472
  6,193
  5,819
  5,370
  4,866
  4,330
  3,781
  3,240
  2,722
  2,241
  1,807
  1,426
  1,101
  830
  610
Current shareholders' claim on cash, %
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2
  98.2

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 -46.3
Price to Sales 1.1
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 20
Price to Free Cash Flow 98.8
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 $14251.299 million for the last fiscal year's total revenue generated by HollyFrontier. The default revenue input number comes from 0001 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 29.3% 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 73%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3011 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 5.4% 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 39.4%.

Life of production assets of 16.8 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 7.1%. 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 - $5370.829 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 176.175 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 $12.0 billion.

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COMPANY NEWS

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