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Delek US Holdings (DK) Up 16% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have added about 16% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delek US Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Delek Q4 Loss Narrower Than Expected
Delek US Holdings reported adjusted loss of 61 cents a share narrower than the Zacks Consensus Estimate was of a loss of 80 cents. The bottom line performance was substantially better than the year-ago quarter’s loss of $2.77 per share, attributable to a stronger-than-expected contribution from its refining segment. Margin from the Refining unit was $32.1 million, outpacing the Zacks Consensus Estimate of $25 million.
Quarterly revenues of $3.1 billion compared favorably with the year-ago sales of $1.89 billion and surpassed the Zacks Consensus Estimate of $2.77 billion.
Segmental Performances
Refining: DK reported a positive margin of $32.1 million for this segment against the negative $82 million in the year-ago quarter. Moreover, adjusted margins of $36.9 million rebounded from -$126.9 million in the year-ago period. Results improved primarily due to increased demand, attributable in part to low clean product inventories, and improving crack spreads.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P. (DKL), a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. The Logistics unit’s margin of $66.6 million was higher than the year-ago period’s figure of $62.2 million, this improvement is led by higher utilization on assets supporting the refineries and and the West Texas Wholesale.
Retail: Margin for the unit, which was formed from the acquisition of Alon USA Energy in 2017, rose about 20.5% to $15.3 million from the year-earlier quarter’s level of $12.7 million. Delek’s merchandise sales of $ 75.5 million with a margin of 33.6%, on average, compared marginally unfavorably with $75.9 million sales, carrying a margin of 30.1%, on average, in the prior year. Its retail fuel gallon sale totaled 42.3 million in the December quarter of 2021, the average margin being 30 cents per gallon. This compared favorably with 41.5 million sale, the average margin being 33 cents per gallon in fourth-quarter 2020.
Financials
Total operating expenses incurred in the quarter increased about 42% from the prior-year period’s level to $ 3,118.7 million.
In the reported quarter, Delek spent $65.5 million on capital programs (60.5% on the Refining segment). As of Dec 31, 2021, DK had cash and cash equivalents worth $856.5 million and long-term debt of $ 2,125.8 million, with the total debt to total capital of about 70%.
Guidance
Delek projects first-quarter 2022 total operating expenses in the $160-$170 million band while total crude throughput is estimated in the 275,000-285,000 barrels per day range.
For full year 2022, Delek anticipates capital expenses to be around $250-$260 million, on a gross basis including $112 million of spending on discretionary and business development projects, out of which about $59 million belong to in the logistics segment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted 48.62% 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 quintile 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
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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Delek US Holdings (DK) Up 16% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have added about 16% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Delek US Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Delek Q4 Loss Narrower Than Expected
Delek US Holdings reported adjusted loss of 61 cents a share narrower than the Zacks Consensus Estimate was of a loss of 80 cents. The bottom line performance was substantially better than the year-ago quarter’s loss of $2.77 per share, attributable to a stronger-than-expected contribution from its refining segment. Margin from the Refining unit was $32.1 million, outpacing the Zacks Consensus Estimate of $25 million.
Quarterly revenues of $3.1 billion compared favorably with the year-ago sales of $1.89 billion and surpassed the Zacks Consensus Estimate of $2.77 billion.
Segmental Performances
Refining: DK reported a positive margin of $32.1 million for this segment against the negative $82 million in the year-ago quarter. Moreover, adjusted margins of $36.9 million rebounded from -$126.9 million in the year-ago period. Results improved primarily due to increased demand, attributable in part to low clean product inventories, and improving crack spreads.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P. (DKL), a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. The Logistics unit’s margin of $66.6 million was higher than the year-ago period’s figure of $62.2 million, this improvement is led by higher utilization on assets supporting the refineries and and the West Texas Wholesale.
Retail: Margin for the unit, which was formed from the acquisition of Alon USA Energy in 2017, rose about 20.5% to $15.3 million from the year-earlier quarter’s level of $12.7 million. Delek’s merchandise sales of $ 75.5 million with a margin of 33.6%, on average, compared marginally unfavorably with $75.9 million sales, carrying a margin of 30.1%, on average, in the prior year. Its retail fuel gallon sale totaled 42.3 million in the December quarter of 2021, the average margin being 30 cents per gallon. This compared favorably with 41.5 million sale, the average margin being 33 cents per gallon in fourth-quarter 2020.
Financials
Total operating expenses incurred in the quarter increased about 42% from the prior-year period’s level to $ 3,118.7 million.
In the reported quarter, Delek spent $65.5 million on capital programs (60.5% on the Refining segment). As of Dec 31, 2021, DK had cash and cash equivalents worth $856.5 million and long-term debt of $ 2,125.8 million, with the total debt to total capital of about 70%.
Guidance
Delek projects first-quarter 2022 total operating expenses in the $160-$170 million band while total crude throughput is estimated in the 275,000-285,000 barrels per day range.
For full year 2022, Delek anticipates capital expenses to be around $250-$260 million, on a gross basis including $112 million of spending on discretionary and business development projects, out of which about $59 million belong to in the logistics segment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
The consensus estimate has shifted 48.62% 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 quintile 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
Delek US Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.