HF Sinclair Earnings Soar on Strong Refining Performance; Reinstates Dividend With Growth

HF Sinclair exceeded market expectations, reporting adjusted earnings of $175.6 million in the first quarter compared with an adjusted loss of $85.3 million a year ago. With the close of the Sinclair Oil acquisition and strong financial performance, management reinstated the dividend earlier than expected at a higher rate of $0.40 per share. The outlook for all refiners remains positive in the near term given strong demand despite higher prices and tight global refining markets due in part to sanctions on Russia. As such, we expect the guidance for $1 billion in shareholder returns in the next 12 months will actually be exceeded given that was made assuming midcycle conditions. Our fair value estimate and narrow moat rating are unchanged. HF Sinclair is one of the cheaper refiners under our coverage. With the dividend reinstituted and potential for stronger gasoline margins, it could start to close the gap with better-performing peers.