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Why Is Delek US Holdings (DK) Down 10.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have lost about 10.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delek US Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Delek Q4 Earnings & Revenues Beat Estimates
Delek US Holdings reported fourth-quarter 2022 adjusted net income of 88 cents per share, beating the Zacks Consensus Estimate of 82 cents. The bottom line was also better than the year-ago quarter’s loss of 61 cents. The outperformance could be attributed to record contributions from the Refining segment.
The diversified downstream energy company said that its adjusted EBITDA was $220.9 million compared with $32.8 million in the year-ago period.
Meanwhile, Delek’s revenues surged 44.1% year over year to $4.5 billion. It also beat the consensus mark of $3.9 billion, primarily due to the outperformance of the Refining and Logistics segments.
In good news for investors, DK’s board of directors approved an increase of 1 cent per share in the regular dividend, bringing the quarterly dividend to 22 cents per share. The dividend will be paid out on Mar 17, 2023, to shareholders of record as on Mar 10, 2023.
Segmental Details
Refining: In the fourth quarter of 2022, this segment of Delek recorded an adjusted EBITDA of $182.0 million, showing a remarkable improvement from the year-ago quarter’s loss of $3.3 million.
The significant year-over-year surge in earnings can be attributed mainly to the higher refining crack spreads, with Delek’s benchmark crack spreads soaring an average of 76.0% during the period.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P. — a publicly traded master limited partnership that owns, operates, develops, and acquires pipelines and other midstream assets.
During the fourth quarter of 2022, the logistics sector achieved an adjusted EBITDA of $90.6 million, indicating an increase of $22.5 million from the year-ago quarter’s $68.1 million.
This substantial growth is attributed to the exceptional performance of the Delek Permian Gathering system, and the successful acquisition of 3 Bear Delaware, both of which made significant contributions to the sector's overall profitability.
Retail: Adjusted EBITDA for the retail segment in the fourth quarter of 2022 amounted to $7.8 million, indicating a decline from the year-ago quarter’s $10.0 million.
The decrease was largely due to a reduction in volumes and lower average margins during the fourth quarter of 2022, as compared with the year-ago quarter’s levels.
Meanwhile, merchandise sales of $77.4 million were more than the year-ago quarter’s sales of $75.5 million. Sales also beat the Zacks Consensus Estimate by 2.7%. However, the merchandise margin of 32.1% declined from 33.6% in the year-ago period.
In the fourth quarter, DK’s retail stations sold 41,523 thousand gallons of gasoline compared with 42,303 in the year-ago period.
Costs & Balance Sheet
The company’s total operating costs and expenses were $4.59 million in the fourth quarter of 2022, up 48.7% from the year-ago quarter. This rise was primarily due to higher cost of sales.
As of Dec 31, 2022, Delek US Holdings had cash and cash equivalents of $841.3 million and a long-term debt of $2.98 million, with debt-to-total capital of about 73%.
Guidance
For full-year 2023, Delek expects capital expenditures of approximately $350 million as it plans to spend $202 million on Refining, $81 million on Logistics, $31 million on Retail and $36 million on Corporate/Other.
Delek plans to reduce costs and improve processes, expecting a $30-$40 million improvement in the first quarter of 2023 and an additional $50-$60 million in 2023. The annual run rate is projected to be $90-$100 million, possibly through lower costs or better markets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 79.49% due to these changes.
VGM Scores
Currently, Delek US Holdings has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delek US Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Delek US Holdings (DK) Down 10.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have lost about 10.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Delek US Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Delek Q4 Earnings & Revenues Beat Estimates
Delek US Holdings reported fourth-quarter 2022 adjusted net income of 88 cents per share, beating the Zacks Consensus Estimate of 82 cents. The bottom line was also better than the year-ago quarter’s loss of 61 cents. The outperformance could be attributed to record contributions from the Refining segment.
The diversified downstream energy company said that its adjusted EBITDA was $220.9 million compared with $32.8 million in the year-ago period.
Meanwhile, Delek’s revenues surged 44.1% year over year to $4.5 billion. It also beat the consensus mark of $3.9 billion, primarily due to the outperformance of the Refining and Logistics segments.
In good news for investors, DK’s board of directors approved an increase of 1 cent per share in the regular dividend, bringing the quarterly dividend to 22 cents per share. The dividend will be paid out on Mar 17, 2023, to shareholders of record as on Mar 10, 2023.
Segmental Details
Refining: In the fourth quarter of 2022, this segment of Delek recorded an adjusted EBITDA of $182.0 million, showing a remarkable improvement from the year-ago quarter’s loss of $3.3 million.
The significant year-over-year surge in earnings can be attributed mainly to the higher refining crack spreads, with Delek’s benchmark crack spreads soaring an average of 76.0% during the period.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P. — a publicly traded master limited partnership that owns, operates, develops, and acquires pipelines and other midstream assets.
During the fourth quarter of 2022, the logistics sector achieved an adjusted EBITDA of $90.6 million, indicating an increase of $22.5 million from the year-ago quarter’s $68.1 million.
This substantial growth is attributed to the exceptional performance of the Delek Permian Gathering system, and the successful acquisition of 3 Bear Delaware, both of which made significant contributions to the sector's overall profitability.
Retail: Adjusted EBITDA for the retail segment in the fourth quarter of 2022 amounted to $7.8 million, indicating a decline from the year-ago quarter’s $10.0 million.
The decrease was largely due to a reduction in volumes and lower average margins during the fourth quarter of 2022, as compared with the year-ago quarter’s levels.
Meanwhile, merchandise sales of $77.4 million were more than the year-ago quarter’s sales of $75.5 million. Sales also beat the Zacks Consensus Estimate by 2.7%. However, the merchandise margin of 32.1% declined from 33.6% in the year-ago period.
In the fourth quarter, DK’s retail stations sold 41,523 thousand gallons of gasoline compared with 42,303 in the year-ago period.
Costs & Balance Sheet
The company’s total operating costs and expenses were $4.59 million in the fourth quarter of 2022, up 48.7% from the year-ago quarter. This rise was primarily due to higher cost of sales.
As of Dec 31, 2022, Delek US Holdings had cash and cash equivalents of $841.3 million and a long-term debt of $2.98 million, with debt-to-total capital of about 73%.
Guidance
For full-year 2023, Delek expects capital expenditures of approximately $350 million as it plans to spend $202 million on Refining, $81 million on Logistics, $31 million on Retail and $36 million on Corporate/Other.
Delek plans to reduce costs and improve processes, expecting a $30-$40 million improvement in the first quarter of 2023 and an additional $50-$60 million in 2023. The annual run rate is projected to be $90-$100 million, possibly through lower costs or better markets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 79.49% due to these changes.
VGM Scores
Currently, Delek US Holdings has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Delek US Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.