Need To Know: Analysts Just Made A Substantial Cut To Their HF Sinclair Corporation (NYSE:DINO) Estimates

Market forces rained on the parade of HF Sinclair Corporation (NYSE:DINO) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following this downgrade, HF Sinclair's ten analysts are forecasting 2022 revenues to be US$29b, approximately in line with the last 12 months. Statutory earnings per share are presumed to leap 30% to US$9.37. Before this latest update, the analysts had been forecasting revenues of US$33b and earnings per share (EPS) of US$10.52 in 2022. Indeed, we can see that the analysts are a lot more bearish about HF Sinclair's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for HF Sinclair

Despite the cuts to forecast earnings, there was no real change to the US$56.33 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values HF Sinclair at US$67.00 per share, while the most bearish prices it at US$40.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the HF Sinclair's past performance and to peers in the same industry. It's pretty clear that there is an expectation that HF Sinclair's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 2.7% growth on an annualised basis. This is compared to a historical growth rate of 6.1% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 5.9% annually. So it's clear that despite the slowdown in growth, HF Sinclair is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for HF Sinclair. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on HF Sinclair after the downgrade.

That said, the analysts might have good reason to be negative on HF Sinclair, given recent substantial insider selling. Learn more, and discover the 3 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.