NEW YORK (TheStreet) -- Shares of HollyFrontier (HFC - Get Report) were gaining 4.5% to $50.49 on heavy trading volume Friday following a report that Tesoro (TSO) is interested in purchasing the smaller oil and gas refinery company.
Tesoro is rumored to have "renewed" interest in taking over HollyFrontier, according to Reuters. The news source said it was unable to verify the rumor, however. It is unclear if Tesoro has approached HollyFrontier about a potential takeover.
Earlier this year HollyFrontier's board rejected terms Tesoro offered to acquire the company, according to Reuters. Tesoro's offer price was not disclosed at the time.
About 3.3 million shares of HollyFrontier were traded by 1 p.m. following the report, above the company's average trading volume of about 3.2 million shares a day.
TheStreet Ratings team rates HOLLYFRONTIER CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
We rate HOLLYFRONTIER CORP (HFC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, solid stock price performance and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 104.5% when compared to the same quarter one year prior, rising from $176.43 million to $360.82 million.
- HFC's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- After a year of stock price fluctuations, the net result is that HFC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- HOLLYFRONTIER CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HOLLYFRONTIER CORP reported lower earnings of $1.40 versus $3.62 in the prior year. This year, the market expects an improvement in earnings ($5.00 versus $1.40).
- You can view the full analysis from the report here: HFC