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Amid the recent drop in crude oil prices, investors are certainly scoping out opportunities in energy stocks.
While big oil giants may come to mind, Delek Logistics Partners (DKL - Free Report) and MPLX LP (MPLX - Free Report) are two companies that shouldn’t be overlooked after making their way onto the Zacks Rank #1 (Strong Buy) list.
Having critical operations in regard to energy infrastructure, here’s a look at why now is a good time to buy these highly-ranked energy stocks.
Delek’s Financial Performance is Improving
Reporting its Q2 results in early August Delek achieved record quarterly EBITDA of $102.4 million which increased 10% from 92.8 million in the comparative quarter. Operating energy transportation pipelines, Delek has become a full-service crude water and natural gas provider in the prolific Permian Basin.
Image Source: Zacks Investment Research
Furthermore, Delek’s Zacks Oil and Gas-Production Pipeline-MLB Industry is in the top 11% of over 250 Zacks industries.
Delek’s position within its strengthening business industry helped the company post Q2 EPS of $0.87 which beat expectations by 7% and increased 19% from $0.73 per share a year ago.
Quarterly sales of $264.63 million beat estimates by 3% and rose 7% from $246.91 million in Q2 2023. Delek is now expected to post single-digit earnings and sales growth this year with its top and bottom lines projected to increase by double-digits in fiscal 2025.
Image Source: Zacks Investment Research
It’s also important to note that Delek’s distributable cash flow increased 12% during Q2 to $67.8 million with DKL having an attractive Price to Cash Flow (P/CF) ratio of 7.2X while trading at a very reasonable forward earnings multiple of 12X.
Image Source: Zacks Investment Research
MPLX is an Intriguing Master Limited Partnership (MLP)
As a master limited partnership (MLP) MPLX is one of the more appealing midstream energy services providers with its operations including fuel distribution solutions.
To that point, MPLX’s energy infrastructure and logistics assets were put in place for its parent company Marathon Petroleum Corporation (MPC - Free Report) , a leading independent refiner, transporter, and marketer of petroleum products.
Plus, MPLX’s Zacks Oil and Gas-Production and Pipelines Industry is in the top 38% of all Zacks industries.
Correlating with such, MPLX impressively exceeded its Q2 expectations in August while seeing its top and bottom lines spike by 13% and 29% during the quarter respectively.
Image Source: Zacks Investment Research
With many energy stocks falling over the last month in correlation with the decline in crude prices, it's noteworthy that MPLX shares are at a 52-week high of $43.
Image Source: Zacks Investment Research
Rising +18% YTD to outperform the broader indexes, MPLX still trades at 9.9X forward earnings and a stark discount to its industry average of 16.7X and the S&P 500’s 23.4X. Even better, MPLX’s EPS is projected to increase 13% in FY24 and is slated to expand another 5% next year to $4.52.
Image Source: Zacks Investment Research
Enticing Dividends
Adding glamour to their improved outlook and attractive valuations is that Delek and MPLX have annual dividend yields of 10.64% and 7.94%.
This towers over the broader Zacks Oils and Energy sectors' 4.03% average and the S&P 500’s 1.28% average.
Image Source: Zacks Investment Research
Bottom Line
Following their strong Q2 results last month, earnings estimate revisions have remained higher for these top oil and energy infrastructure stocks. Considering such, now appears to be an ideal time to buy as Delek and MPLX’s steady expansion is magnified by their valuations and enticing dividends.
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Time to Buy These Top Oil & Energy Stocks
Amid the recent drop in crude oil prices, investors are certainly scoping out opportunities in energy stocks.
While big oil giants may come to mind, Delek Logistics Partners (DKL - Free Report) and MPLX LP (MPLX - Free Report) are two companies that shouldn’t be overlooked after making their way onto the Zacks Rank #1 (Strong Buy) list.
Having critical operations in regard to energy infrastructure, here’s a look at why now is a good time to buy these highly-ranked energy stocks.
Delek’s Financial Performance is Improving
Reporting its Q2 results in early August Delek achieved record quarterly EBITDA of $102.4 million which increased 10% from 92.8 million in the comparative quarter. Operating energy transportation pipelines, Delek has become a full-service crude water and natural gas provider in the prolific Permian Basin.
Image Source: Zacks Investment Research
Furthermore, Delek’s Zacks Oil and Gas-Production Pipeline-MLB Industry is in the top 11% of over 250 Zacks industries.
Delek’s position within its strengthening business industry helped the company post Q2 EPS of $0.87 which beat expectations by 7% and increased 19% from $0.73 per share a year ago.
Quarterly sales of $264.63 million beat estimates by 3% and rose 7% from $246.91 million in Q2 2023. Delek is now expected to post single-digit earnings and sales growth this year with its top and bottom lines projected to increase by double-digits in fiscal 2025.
Image Source: Zacks Investment Research
It’s also important to note that Delek’s distributable cash flow increased 12% during Q2 to $67.8 million with DKL having an attractive Price to Cash Flow (P/CF) ratio of 7.2X while trading at a very reasonable forward earnings multiple of 12X.
Image Source: Zacks Investment Research
MPLX is an Intriguing Master Limited Partnership (MLP)
As a master limited partnership (MLP) MPLX is one of the more appealing midstream energy services providers with its operations including fuel distribution solutions.
To that point, MPLX’s energy infrastructure and logistics assets were put in place for its parent company Marathon Petroleum Corporation (MPC - Free Report) , a leading independent refiner, transporter, and marketer of petroleum products.
Plus, MPLX’s Zacks Oil and Gas-Production and Pipelines Industry is in the top 38% of all Zacks industries.
Correlating with such, MPLX impressively exceeded its Q2 expectations in August while seeing its top and bottom lines spike by 13% and 29% during the quarter respectively.
Image Source: Zacks Investment Research
With many energy stocks falling over the last month in correlation with the decline in crude prices, it's noteworthy that MPLX shares are at a 52-week high of $43.
Image Source: Zacks Investment Research
Rising +18% YTD to outperform the broader indexes, MPLX still trades at 9.9X forward earnings and a stark discount to its industry average of 16.7X and the S&P 500’s 23.4X. Even better, MPLX’s EPS is projected to increase 13% in FY24 and is slated to expand another 5% next year to $4.52.
Image Source: Zacks Investment Research
Enticing Dividends
Adding glamour to their improved outlook and attractive valuations is that Delek and MPLX have annual dividend yields of 10.64% and 7.94%.
This towers over the broader Zacks Oils and Energy sectors' 4.03% average and the S&P 500’s 1.28% average.
Image Source: Zacks Investment Research
Bottom Line
Following their strong Q2 results last month, earnings estimate revisions have remained higher for these top oil and energy infrastructure stocks. Considering such, now appears to be an ideal time to buy as Delek and MPLX’s steady expansion is magnified by their valuations and enticing dividends.