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. While HEP is still in line with the averages on profitability rating, there are concerns on its financial health. 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.
In the past year HEP had a positive cash flow from operations.

1.2 Ratios

HEP has a Return On Assets (8.82%) which is in line with its industry peers.
HEP has a Return On Equity of 26.66%. This is in the better half of the industry: HEP outperforms 65.90% of its industry peers.
The Return On Invested Capital of HEP (7.61%) is worse than 60.83% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for HEP 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

HEP has a Profit Margin of 40.91%. This is amongst the best in the industry. HEP outperforms 80.18% of its industry peers.
HEP's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 42.93%, HEP is in the better half of the industry, outperforming 74.65% of the companies in the same industry.
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

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

2.2 Solvency

The Debt to FCF ratio of HEP is 4.77, which is a neutral value as it means it would take HEP, 4.77 years of fcf income to pay off all of its debts.
HEP has a Debt to FCF ratio (4.77) which is comparable to the rest of the industry.
HEP has a Debt/Equity ratio of 1.71. This is a high value indicating a heavy dependency on external financing.
HEP's Debt to Equity ratio of 1.71 is on the low side compared to the rest of the industry. HEP is outperformed by 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.
HEP has a Current ratio (1.15) which is comparable to the rest of the industry.
A Quick Ratio of 1.15 indicates that HEP should not have too much problems paying its short term obligations.
HEP has a Quick ratio of 1.15. This is comparable 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

HEP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.86%, which is quite good.
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.
Looking at the last year, HEP shows a quite strong growth in Revenue. The Revenue has grown by 11.56% in the last year.
The Revenue has been growing slightly by 3.80% on average over the past years.

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.
The Revenue is expected to grow by 5.53% on average over the next years.

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

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 10.82, the valuation of HEP can be described as reasonable.
The rest of the industry has a similar Price/Earnings ratio as HEP.
HEP's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.25.
With a Price/Forward Earnings ratio of 9.29, the valuation of HEP can be described as very reasonable.
HEP's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, HEP is valued rather cheaply.

		Industry Rank	Sector Rank
PE	10.82
Fwd PE	9.29

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, HEP is valued a bit 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

With a Yearly Dividend Yield of 6.85%, HEP is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.73, HEP pays a bit more dividend than its industry peers.
HEP's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.

		Industry Rank	Sector Rank
Dividend Yield	6.85%

5.2 History

The dividend of HEP decreases each year by -12.46%.
HEP has paid a dividend for at least 10 years, which is 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.