Alon USA Energy (NYSE: ALJ) and HollyFrontier Corporation (NYSE:HFC) are both energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitabiliy, earnings, dividends and risk.

Earnings & Valuation

This table compares Alon USA Energy and HollyFrontier Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alon USA Energy N/A N/A N/A ($0.56) -23.79
HollyFrontier Corporation $12.34 billion 0.44 $750.80 million $0.79 38.65

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

Dividends

Alon USA Energy pays an annual dividend of $0.60 per share and has a dividend yield of 4.5%. HollyFrontier Corporation pays an annual dividend of $1.32 per share and has a dividend yield of 4.3%. Alon USA Energy pays out -107.1% of its earnings in the form of a dividend. HollyFrontier Corporation pays out 167.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alon USA Energy has raised its dividend for 4 consecutive years and HollyFrontier Corporation has raised its dividend for 5 consecutive years. Alon USA Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Alon USA Energy has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, HollyFrontier Corporation has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500.

Insider & Institutional Ownership

49.5% of Alon USA Energy shares are owned by institutional investors. Comparatively, 84.7% of HollyFrontier Corporation shares are owned by institutional investors. 8.8% of Alon USA Energy shares are owned by insiders. Comparatively, 0.5% of HollyFrontier Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Alon USA Energy and HollyFrontier Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alon USA Energy 0.89% 5.65% 1.96%
HollyFrontier Corporation 1.13% 2.65% 1.50%

Analyst Recommendations

This is a summary of current ratings for Alon USA Energy and HollyFrontier Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alon USA Energy 0 3 1 0 2.25
HollyFrontier Corporation 3 5 4 0 2.08

Alon USA Energy currently has a consensus price target of $11.38, suggesting a potential downside of 14.60%. HollyFrontier Corporation has a consensus price target of $30.40, suggesting a potential downside of 0.43%. Given HollyFrontier Corporation’s higher probable upside, analysts clearly believe HollyFrontier Corporation is more favorable than Alon USA Energy.

Summary

HollyFrontier Corporation beats Alon USA Energy on 8 of the 14 factors compared between the two stocks.

About Alon USA Energy

Alon USA Energy, Inc. is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company’s segments include refining and marketing, asphalt and retail. Its refineries produce petroleum products, including various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt, and other petroleum-based products. As of December 31, 2016, it held interests in Alon USA Partners, LP, which owned a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day and an integrated wholesale marketing business. In addition, it owned a crude oil refinery in Krotz Springs, Louisiana, with a crude oil throughput capacity of approximately 74,000 barrels per day (bpd), as of December 31, 2016. The Company also owns crude oil refineries in California. As of December 31, 2016, it operated approximately 300 convenience stores.

About HollyFrontier Corporation

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.

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