Delek US Holdings
Delek US Holdings (DK) has the lowest dividend yield of 3.1% among refiners. PBF Energy (PBF) has the highest dividend yield of 4.8%. Valero Energy (VLO) and Marathon Petroleum (MPC) have yields of 4.8% and 4.5%, respectively. Phillips 66 (PSX) and HollyFrontier (HFC) have relatively lower dividend yields of 4.2% and 3.3%, respectively. We’ll discuss Delek US Holdings’ yield and stock position.
Delek US Holdings stock has the smallest market cap of $3 billion. The stock has fallen 2% in the second quarter. Delek US Holdings has made a dividend payment of $0.28 per share in the second quarter—12% YoY growth. The dividend was announced on May 6 and paid on June 3. 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.
Delek US Holdings trades at a current forward PE ratio of 4.8x, which is below the peer average of 5.4x. PBF Energy, Valero Energy, and HollyFrontier trade below the peer average at forward PE ratios of 4.5x, 5.3x, and 5.2x, respectively. Marathon Petroleum and Phillips 66 trade at forward PE ratios of 5.8x and 6.7x, respectively.
Delek US Holdings’ lower valuations are mainly due to its above-average debt. The company’s total debt-to-total capital ratio was at 48% in the first quarter—above the peer average of 36%. In the first quarter, the company’s operating cash flows of $133 million couldn’t cover the combined capex and dividend outflows, which stood at $124 million and $21 million, respectively.
Analysts expect Delek US Holdings’ earnings to fall 4% in 2019 and 13% in 2020. The company’s peers, which are estimated to post lower earnings in the current year, are expected to see higher earnings in the next year. Delek US Holdings’ lower earnings estimate is due to the expectation of weaker refining earnings driven by the narrowing Midland oil spread.
Delek US Holdings stock looks dull with the lowest dividend yield, weaker financials, and lower earnings expectation.