We assign a fundamental rating of 4 out of 10 to HEP. HEP was compared to 207 industry peers in the Oil, Gas & Consumable Fuels industry. There are concerns on the financial health of HEP while its profitability can be described as average. HEP has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

HEP had positive earnings in the past year.
HEP had a positive operating cash flow in the past year.

1.2 Ratios

HEP has a Return On Assets (8.82%) which is in line with its industry peers.
With a decent Return On Equity value of 26.66%, HEP is doing good in the industry, outperforming 65.90% of the companies in the same industry.
HEP has a Return On Invested Capital of 7.61%. This is in the lower half of the industry: HEP underperforms 60.83% of its industry peers.
HEP had an Average Return On Invested Capital over the past 3 years of 7.99%. This is significantly below the industry average of 21.94%.

		Industry Rank	Sector Rank
ROA	8.82%
ROE	26.66%
ROIC	7.61%

ROA(3y)8.55%

ROA(5y)8.88%

ROE(3y)39.57%

ROE(5y)43.91%

ROIC(3y)7.99%

ROIC(5y)8.68%

1.3 Margins

With an excellent Profit Margin value of 40.91%, HEP belongs to the best of the industry, outperforming 80.18% of the companies in the same industry.
HEP's Profit Margin has improved in the last couple of years.
HEP's Operating Margin of 42.93% is fine compared to the rest of the industry. HEP outperforms 74.65% of its industry peers.
HEP's Operating Margin has declined in the last couple of years.
HEP has a better Gross Margin (62.77%) than 61.75% of its industry peers.
In the last couple of years the Gross Margin of HEP has declined.

		Industry Rank	Sector Rank
OM	42.93%
PM (TTM)	40.91%
GM	62.77%

OM growth 3Y-6.27%

OM growth 5Y-3.66%

PM growth 3Y-2.17%

PM growth 5Y2.34%

GM growth 3Y-4.02%

GM growth 5Y-2.47%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), HEP is creating some value.
The number of shares outstanding for HEP has been increased compared to 1 year ago.
The debt/assets ratio for HEP has been reduced compared to a year ago.

2.2 Solvency

HEP has a debt to FCF ratio of 4.77. This is a neutral value as HEP would need 4.77 years to pay back of all of its debts.
HEP's Debt to FCF ratio of 4.77 is in line compared to the rest of the industry. HEP outperforms 55.30% of its industry peers.
A Debt/Equity ratio of 1.71 is on the high side and indicates that HEP has dependencies on debt financing.
HEP has a worse Debt to Equity ratio (1.71) than 81.11% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.71
Debt/FCF	4.77
Altman-Z	N/A

ROIC/WACC1.05

WACC7.28%

2.3 Liquidity

A Current Ratio of 1.15 indicates that HEP should not have too much problems paying its short term obligations.
With a Current ratio value of 1.15, HEP perfoms like the industry average, outperforming 48.39% of the companies in the same industry.
HEP has a Quick Ratio of 1.15. This is a normal value and indicates that HEP is financially healthy and should not expect problems in meeting its short term obligations.
HEP's Quick ratio of 1.15 is in line compared to the rest of the industry. HEP outperforms 57.14% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.15
Quick Ratio	1.15

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 13.86% over the past year.
Measured over the past years, HEP shows a decrease in Earnings Per Share. The EPS has been decreasing by -1.41% on average per year.
The Revenue has grown by 11.56% in the past year. This is quite good.
Measured over the past years, HEP shows a small growth in Revenue. The Revenue has been growing by 3.80% on average per year.

EPS 1Y (TTM)13.86%

EPS 3Y-0.56%

EPS 5Y-1.41%

EPS Q2Q%51.52%

Revenue 1Y (TTM)11.56%

Revenue growth 3Y0.91%

Revenue growth 5Y3.8%

Sales Q2Q%6.31%

3.2 Future

HEP is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.09% yearly.
HEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.53% yearly.

EPS Next Y7.71%

EPS Next 2Y11.49%

EPS Next 3Y9.09%

EPS Next 5YN/A

Revenue Next Year9.05%

Revenue Next 2Y7.91%

Revenue Next 3Y5.53%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 10.82 indicates a reasonable valuation of HEP.
HEP's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 27.25. HEP is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 9.29, the valuation of HEP can be described as reasonable.
HEP's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 25.98. HEP is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	10.82
Fwd PE	9.29

4.2 Price Multiples

HEP's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. HEP is more expensive than 70.51% of the companies in the same industry.
HEP's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. HEP is cheaper than 68.66% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	8.05
EV/EBITDA	11.73

4.3 Compensation for Growth

HEP's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.

PEG (NY)1.4

PEG (5Y)N/A

EPS Next 2Y11.49%

EPS Next 3Y9.09%

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5. Dividend

5.1 Amount

HEP has a Yearly Dividend Yield of 6.85%, which is a nice return.
Compared to an average industry Dividend Yield of 3.73, HEP pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 1.82, HEP pays a better dividend.

		Industry Rank	Sector Rank
Dividend Yield	6.85%

5.2 History

The dividend of HEP decreases each year by -12.46%.
HEP has been paying a dividend for at least 10 years, so it has a reliable track record.
HEP has decreased its dividend recently.

Dividend Growth(5Y)-12.46%

Div Incr Years1

Div Non Decr Years1

5.3 Sustainability

HEP pays out 74.17% of its income as dividend. This is not a sustainable payout ratio.

DP74.17%

EPS Next 2Y11.49%

EPS Next 3Y9.09%

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Holly Energy Partners LP / HEP FAQ

What is the fundamental rating for HEP stock?

ChartMill assigns a fundamental rating of 4 / 10 to HEP.

What is the valuation status of Holly Energy Partners LP (HEP) stock?

ChartMill assigns a valuation rating of 5 / 10 to Holly Energy Partners LP (HEP). This can be considered as Fairly Valued.

How profitable is Holly Energy Partners LP (HEP) stock?

Holly Energy Partners LP (HEP) has a profitability rating of 5 / 10.

What is the valuation of Holly Energy Partners LP based on its PE and PB ratios?

The Price/Earnings (PE) ratio for Holly Energy Partners LP (HEP) is 10.82 and the Price/Book (PB) ratio is 2.89.

What is the financial health of Holly Energy Partners LP (HEP) stock?

The financial health rating of Holly Energy Partners LP (HEP) is 3 / 10.