Head to Head Review: Andeavor (ANDV) and HollyFrontier (HFC)

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Andeavor (NYSE: ANDV) and HollyFrontier (NYSE:HFC) are both large-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Profitability

This table compares Andeavor and HollyFrontier’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Andeavor 4.27% 6.51% 2.99%
HollyFrontier 7.31% 10.21% 5.62%

Earnings and Valuation

This table compares Andeavor and HollyFrontier’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Andeavor $34.98 billion 0.56 $1.53 billion $6.47 20.08
HollyFrontier $14.25 billion 0.82 $805.39 million $2.32 28.66

Andeavor has higher revenue and earnings than HollyFrontier. Andeavor is trading at a lower price-to-earnings ratio than HollyFrontier, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Andeavor has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, HollyFrontier has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Andeavor and HollyFrontier, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Andeavor 0 9 6 0 2.40
HollyFrontier 3 8 8 0 2.26

Andeavor presently has a consensus target price of $129.68, suggesting a potential downside of 0.17%. HollyFrontier has a consensus target price of $55.81, suggesting a potential downside of 16.06%. Given Andeavor’s stronger consensus rating and higher probable upside, analysts clearly believe Andeavor is more favorable than HollyFrontier.

Dividends

Andeavor pays an annual dividend of $2.36 per share and has a dividend yield of 1.8%. HollyFrontier pays an annual dividend of $1.32 per share and has a dividend yield of 2.0%. Andeavor pays out 36.5% of its earnings in the form of a dividend. HollyFrontier pays out 56.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider & Institutional Ownership

81.1% of Andeavor shares are held by institutional investors. Comparatively, 83.3% of HollyFrontier shares are held by institutional investors. 7.0% of Andeavor shares are held by company insiders. Comparatively, 0.6% of HollyFrontier shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

About Andeavor

Andeavor, through its subsidiaries, operates as an independent petroleum refining, logistics, and marketing company in the United States. The company operates in three segments: Marketing, Logistics, and Refining. The Marketing segment sells gasoline and diesel fuel through retail, branded, and unbranded channels. This segment operates a network of 3,255 retail stations under the ARCO, Shell, Mobil, and SUPERAMERICA brands. The Logistics segment gathers and transports crude oil by pipelines, as well as by trucks. It operates approximately 13 million barrels of crude oil, feedstock, blendstock, refined product, and asphalt storage tanks. The Refining segment buys and refines crude oil and other feed stocks into transportation fuels, such as gasoline and gasoline blend stocks, jet fuel, and diesel fuel, as well as other products, including heavy fuel oils, liquefied petroleum gas, petroleum coke, calcined coke, and asphalt. It also sells refined products in the bulk market principally to independent unbranded distributors, other refining and marketing companies, utilities, railroads, airlines, and marine and industrial end-users in the western United States. This segment owns and operates 10 petroleum refineries with a combined crude oil capacity of approximately 1,157 thousand barrels per day. The company was formerly known as Tesoro Corporation and changed its name to Andeavor in August 2017. Andeavor was founded in 1968 and is headquartered in San Antonio, Texas.

About HollyFrontier

HollyFrontier Corporation operates as an independent petroleum refiner in the United States. The company operates through three segments: Refining, Lubricants and Specialty Products, and HEP. It primarily produces high-value light products, such as gasoline, diesel and jet fuel, and specialty lubricant products, as well as specialty and modified asphalt. The company offers its products to other refiners, convenience store chains, independent marketers, retailers, truck stop chains, wholesalers, railroads, governmental entities, paving contractors or manufacturers, and commercial and specialty markets, as well as for commercial airline use. It owns and operates 5 refineries with a combined crude oil processing capacity of approximately 457,000 barrels per day in El Dorado, Kansas; Tulsa, Oklahoma; Artesia, New Mexico; Cheyenne, Wyoming; and Woods Cross, Utah. The company also owns and operates vacuum distillation and other facilities in Lovington, New Mexico, as well as asphalt terminals in Arizona, New Mexico, and Oklahoma. Its refineries serve markets in the Mid-Continent, Southwest, and Rocky Mountain regions of the United States. In addition, HollyFrontier Corporation produces base oils and other specialized lubricant products; and owns and operates logistic assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities, and refinery processing units. The company was formerly known as Holly Corporation and changed its name to HollyFrontier Corporation as a result of its merger with Frontier Oil Corporation in July 2011. HollyFrontier Corporation was founded in 1947 and is headquartered in Dallas, Texas.

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