HF Sinclair Corporation DINO is set to release first-quarter results on May 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.48 per share on revenues of $7.1 billion.
Let’s delve into the factors that might have influenced this independent U.S. refiner’s results in the March quarter. But it’s worth taking a look at DINO’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last reported quarter, the Dallas, TX-based downstream operator missed the consensus mark on lower-than-expected income from its refining operations. DINO had reported adjusted earnings per share of $2.97, well below the Zacks Consensus Estimate of $3.59. However, revenues of $9 billion generated by the firm came in above the Zacks Consensus Estimate by 17.9% on the back of strong lubricants and specialty products sales.
HF Sinclair beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 804%, on average. This is depicted in the graph below:
HF Sinclair Corporation Price and EPS Surprise
HF Sinclair Corporation price-eps-surprise | HF Sinclair Corporation Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the third-quarter bottom line has remained the same in the past seven days. The estimated figure indicates a 49.5% improvement year over year. However, the Zacks Consensus Estimate for revenues suggests a 4.5% decrease from the year-ago period.
Factors to Consider
DINO is expected to have benefited from the strength in refining margins. In the fourth quarter of 2022, the company’s refining gross margin of $23.47 per barrel jumped from $8.70 a year ago. Moreover, throughput rose from 462,740 barrels per day (bpd) in the fourth quarter of 2021 to 673,110 bpd.
Despite softening from the spectacular highs of last year, the overall positive momentum is most likely to have continued in the first quarter, thanks to the strength in fuel demand on the back of rebounding road and airline travel, which has kept crude differentials and margins relatively high. Consequently, the Zacks Consensus Estimate for HF Sinclair’s Refining segment operating income is pegged at $341 million, more than tripling from the prior-year quarter’s profit of $113 million. This is likely to have buoyed the first-quarter results of HF Sinclair.
On a somewhat bearish note, though, HF Sinclair’s total operating costs and expenses in the fourth quarter surged 44.6% year over year to $8.2 billion. The upward cost trajectory is likely to have continued in the to-be-reported period due to the prevailing inflationary environment.
What Does Our Model Say?
The proven Zacks model does not conclusively show that HF Sinclair is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: DINO has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.48 per share each.
Zacks Rank: HF Sinclair currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
Stocks to Consider
While an earnings beat looks uncertain for HF Sinclair, here are some energy firms that you may want to consider on the basis of our model:
Occidental Petroleum OXY has an Earnings ESP of +0.09% and a Zacks Rank #3. The firm is scheduled to release earnings on May 9.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum’s expected EPS growth rate for three to five years is currently 22%, which compares favorably with the industry's growth rate of 21.8%. Valued at around $55.3 billion, OXY has gained 4.9% in a year.
EOG Resources EOG has an Earnings ESP of +0.74% and a Zacks Rank #3. The firm is scheduled to release earnings on May 4.
EOG Resources’ expected EPS growth rate for three to five years is currently 28.6%, which compares favorably with the industry's growth rate of 25.8%. Valued at around $70.2 billion, EOG has gained 2% in a year.
ConocoPhillips COP has an Earnings ESP of +0.13% and a Zacks Rank #3. The firm is scheduled to release earnings on May 4.
ConocoPhillips beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 2.4%, on average. Valued at around $124.7 billion, COP has gained 6.9% in a year.
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