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Delek US Holdings: Lowest Implied Gains

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May. 22 2019, Published 11:09 a.m. ET

Delek US Holdings’ implied gains

We have ranked refining stocks based on their implied gains. We have considered analysts’ mean target price to estimate a stock’s implied gains. Marathon Petroleum (MPC), Phillips 66 (PSX), and PBF Energy (PBF) are the top three stocks with high implied gains at 59%, 40%, and 34%, respectively. HollyFrontier (HFC) and Valero Energy (VLO) have lower gains of 30% and 29%, respectively. Now, we’ll discuss Delek US Holdings (DK).

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Delek US Holdings is a US refiner with refining, logistics, and retail segments. The company is ranked last among the six refiners. Delek US Holdings has 24% implied gains based on analysts’ target price. The implied gains have risen due to the steeper decline the stock price compared to the mean target price. The stock has fallen 31% in the past year. Analysts’ mean target price on Delek US Holdings stock has fallen 22% during the same period.

Earnings growth, valuation, and dividend yield

Delek US Holdings’ earnings are estimated to fall in 2019 due to the weaker Midland spread. Analysts expect the company’s profits to fall 11% to $4.3 per share in 2019. In the first quarter, Delek US Holdings’ adjusted EPS was $1.5 per share. The company trades at a forward PE ratio of 8.7x, which is below the peer average of 9.3x.

Delek US Holdings has raised its dividend 12% YoY to $0.28 per share in the current quarter. In the first quarter, the company returned $67 million to shareholders through dividends and buybacks. In the second quarter, Delek US Holdings expects to repurchase shares worth $60 million. The company’s current dividend yield is 3.1%, which is below the peer average of 3.8%.

Delek US Holdings has the lowest implied gains with a lower dividend yield. The stock trades at below-average valuations. The company has a lower earnings decline rate compared to its peers.

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