How the Wheels Came Off Holly Energy Partners' Bus

Holly Energy Partners L.P. (NYSE: HEP) reported earnings on July 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Holly Energy Partners met expectations on revenue and whiffed on earnings per share.

Compared to the prior-year quarter, revenue improved significantly while GAAP earnings per share shrank.

Gross margin expanded, operating margin was steady, and net margin contracted.

Revenue details
Holly Energy Partners logged revenue of $63.7 million. The five analysts polled by S&P Capital IQ hoped for sales of $64.5 million on the same basis. GAAP-reported sales were 25% higher than the prior-year quarter's $50.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.64. The six earnings estimates compiled by S&P Capital IQ forecast $0.73 per share. GAAP EPS of $0.63 for Q2 were 8.7% lower than the prior-year quarter's $0.69 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 71.9%, 10 basis points better than the prior-year quarter. Operating margin was 53.6%, about the same as the prior-year quarter. Net margin was 27.1%, 270 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $71.3 million. On the bottom line, the average EPS estimate is $0.81.

Next year's average estimate for revenue is $275.6 million. The average EPS estimate is $3.03.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 100 members rating the stock outperform and 13 members rating it underperform. Among 34 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 32 give Holly Energy Partners L.P a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Holly Energy Partners L.P is hold, with an average price target of $62.20.

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