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Why Is Delek US Holdings (DK) Down 1.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have lost about 1.3% 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 catalysts.
Delek US Q3 Earnings and Revenues Surpass Estimates
Delek US Holdings reported third-quarter 2023 adjusted net income of $2.02 per share, which beat the Zacks Consensus Estimate of $1.36. The bottom line also improved from the year-ago quarter’s level of 2 cents. The outperformance could be attributed to record contributions from the Logistics and Retail segments and decreased year-over-year expenses during the quarter.
Net revenues decreased 11.3% year over year to $4.2 billion. The figure, however, beat the consensus mark of $4 billion. Adjusted EBITDA came in at $345.1 million compared with $414 million in the year-ago period.
On Nov 1, 2023, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24 cents per share. The dividend will be paid out on Nov 20, 2023, to shareholders of record as of Nov 13, 2023.
Segmental Performances
Refining: Adjusted EBITDA for the segment amounted to $285.5 million, indicating a decline from the prior-year quarter’s level of $355.7 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 8.2% during the period. However, the reported figure exceeded our prediction of $177.9 million.
Logistics: During the third quarter, the segment registered an adjusted EBITDA of $96.5 million compared with $91.5 million in the year-ago quarter. The figure beat our projection of $91.7 million. This substantial growth can be attributed to the exceptional performance of the Midland Gathering and the Delaware Gathering systems, as well as annual rate increases.
Retail: The segment registered an adjusted EBITDA of $16.2 million during the reported quarter compared with $13.5 million in the year-ago period. The figure beat our projection of $10.1 million.
Higher fuel volume, higher average fuel margins and higher in-store sales were the main reasons behind the increase.
Merchandise sales of $83.5 million declined from the year-ago quarter’s reported figure of $84.2 million. The figure missed our estimate by 3.9%. The merchandise margin of 5.5% increased from 32.6% recorded in the year-ago period.
DK’s retail stations sold 43,170 thousand gallons of gasoline compared with 44,729 in the corresponding period of 2022.
Financials
Total operating expenses in the third quarter decreased about 14.2% year over year to $4.5 billion. Delek US spent $301.6 million on capital programs (about 65% on the Refining segment) in the same time frame.
As of Sep 30, 2023, the company had cash and cash equivalents worth $901.7 million and long-term debt of $2.6 billion, with debt to total capital of about 69.5%.
Guidance
For full year 2023, DK expects capital expenditures to be in the range of $380-$390 million.
For the fourth quarter, the company anticipates operating costs in the band of $210-$220 million, general and administrative expenses in the range of $65-$70 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -236.6% due to these changes.
VGM Scores
At this time, Delek US Holdings has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Delek US Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Delek US Holdings is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, Phillips 66 (PSX - Free Report) , a stock from the same industry, has gained 11.8%. The company reported its results for the quarter ended September 2023 more than a month ago.
Phillips 66 reported revenues of
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Why Is Delek US Holdings (DK) Down 1.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have lost about 1.3% 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 catalysts.
Delek US Q3 Earnings and Revenues Surpass Estimates
Delek US Holdings reported third-quarter 2023 adjusted net income of $2.02 per share, which beat the Zacks Consensus Estimate of $1.36. The bottom line also improved from the year-ago quarter’s level of 2 cents. The outperformance could be attributed to record contributions from the Logistics and Retail segments and decreased year-over-year expenses during the quarter.
Net revenues decreased 11.3% year over year to $4.2 billion. The figure, however, beat the consensus mark of $4 billion. Adjusted EBITDA came in at $345.1 million compared with $414 million in the year-ago period.
On Nov 1, 2023, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24 cents per share. The dividend will be paid out on Nov 20, 2023, to shareholders of record as of Nov 13, 2023.
Segmental Performances
Refining: Adjusted EBITDA for the segment amounted to $285.5 million, indicating a decline from the prior-year quarter’s level of $355.7 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 8.2% during the period. However, the reported figure exceeded our prediction of $177.9 million.
Logistics: During the third quarter, the segment registered an adjusted EBITDA of $96.5 million compared with $91.5 million in the year-ago quarter. The figure beat our projection of $91.7 million. This substantial growth can be attributed to the exceptional performance of the Midland Gathering and the Delaware Gathering systems, as well as annual rate increases.
Retail: The segment registered an adjusted EBITDA of $16.2 million during the reported quarter compared with $13.5 million in the year-ago period. The figure beat our projection of $10.1 million.
Higher fuel volume, higher average fuel margins and higher in-store sales were the main reasons behind the increase.
Merchandise sales of $83.5 million declined from the year-ago quarter’s reported figure of $84.2 million. The figure missed our estimate by 3.9%. The merchandise margin of 5.5% increased from 32.6% recorded in the year-ago period.
DK’s retail stations sold 43,170 thousand gallons of gasoline compared with 44,729 in the corresponding period of 2022.
Financials
Total operating expenses in the third quarter decreased about 14.2% year over year to $4.5 billion. Delek US spent $301.6 million on capital programs (about 65% on the Refining segment) in the same time frame.
As of Sep 30, 2023, the company had cash and cash equivalents worth $901.7 million and long-term debt of $2.6 billion, with debt to total capital of about 69.5%.
Guidance
For full year 2023, DK expects capital expenditures to be in the range of $380-$390 million.
For the fourth quarter, the company anticipates operating costs in the band of $210-$220 million, general and administrative expenses in the range of $65-$70 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -236.6% due to these changes.
VGM Scores
At this time, Delek US Holdings has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Delek US Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Delek US Holdings is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, Phillips 66 (PSX - Free Report) , a stock from the same industry, has gained 11.8%. The company reported its results for the quarter ended September 2023 more than a month ago.
Phillips 66 reported revenues of