Valuation Scorecard: Stock Rating A-Highest (2/26/24)-HF Sinclair Corp (DINO).

At the current price of $59, what is the market’s view of HF Sinclair’s future operating performance? HF Sinclair’s common shares will need to reach $98 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $116 HF Sinclair stock price by 2028.

Executive Summary

• Key HF Sinclair characteristics: high expected growth, high financial strength, very high profitability, and low stability. A big positive influence on HF Sinclair’s valuation is its superior Growth.
• Very low valuation, average shareholder returns. Current valuation levels are very low relative to the HF Sinclair Peer Group. Recent market returns have tracked the HF Sinclair Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, HF Sinclair shares should reach a level of $510 by 2028 — an 45.7% per year total shareholder return. A 2028 stock price of $98 would reflect median performance and a price of $116 would be required to reach upper quartile performance.
• Growth has been HF Sinclair’s biggest valuation strength. Historical growth has been very high relative to the HF Sinclair Peer Group and forecasted growth is relatively very high. Revenue Growth, EPS Growth, and Equity Growth have been superior. These factors have buoyed market perceptions of HF Sinclair. HF Sinclair’s historical income statement growth has been higher than growth in the balance sheet. Revenue growth has exceeded asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. HF Sinclair’s consensus growth expectations are higher than historical growth.
• Asset Turnover, and Return on Equity are group leading. These factors have strengthened market perceptions of HF Sinclair. The company has very low cash and will have to work to generate attractive investments and improve valuation.
• HF Sinclair’s risk profile is neutral. Overall variability has been very high with very high revenue variability, very high E.P.S. variability, and above average stock price volatility. Financial Strength is relatively very high and earnings’ expectations are relatively high. The debt/capital ratio has declined.

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