A month has gone by since the last earnings report for Delek US Holdings (DK Quick QuoteDK - Free Report) . Shares have added about 6.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Delek Q1 Earnings Better Than Expected

Delek US Holdings reported first-quarter 2022 adjusted profit of 58 cents a share, handsomely beating the Zacks Consensus Estimate of a loss of 14 cents. This outperformance could be attributed to the refining landscape having improved substantially from the pandemic-driven downturn over the past couple of years, prompted by a recent surge in energy prices. Moreover, the bottom line was substantially better than the year-ago quarter’s loss of $1.69 per share, attributable to stronger-than-expected contributions from its refining segment. The margin from the refining unit was $96.9 million, outpacing the Zacks Consensus Estimate of $76 million.

Quarterly revenues of $4.5 billion compared favorably with the year-ago sales of $2.4 billion and surpassed the Zacks Consensus Estimate of $2.8 billion.

Segmental Performances

Refining:  DK reported a positive margin of $96.9 million for this segment compared with $10.4 million in the year-ago quarter. Moreover, the adjusted margin of $152.9 million rebounded from a negative $3.9 million in the year-ago period. On a year-over-year basis, results in this segment were favorably impacted by increased demand, attributable in part to low clean product inventories and continued macroeconomic improvements amid the pandemic, combined with the impact of sanctions on the Russian oil supply and corresponding improvements in crack spreads.

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. The Logistics unit’s margin of $62.3 million was higher than the year-ago period’s figure of $56.9 million. This improvement was led by an increase in the utilization of assets supporting the Big Spring Refinery and enhanced throughput in joint venture pipelines.

Retail: The margin for the unit, which was formed by the acquisition of Alon USA Energy in 2017, declined by about 17.4% to $13.8 million from the year-earlier quarter’s level of $16.7 million. Delek’s merchandise sales of $69.7 million, with a margin of 34.6%, on average, compared unfavorably with $74.6 million sales, carrying a margin of 32.7%, on average, in the prior year. Its retail fuel gallon sales totaled 39.5 million in the reported quarter, the average margin being 31 cents per gallon. This compared marginally unfavorably with 39.8 million sales, the average margin being 35 cents per gallon in the first quarter of 2021.

Financials

Total operating expenses incurred in the quarter increased by about 80.9% from the prior-year period’s level to $4,412.4 million.

In the reported quarter, Delek spent $32.9 million on capital programs (about 43.5% on the Refining segment). As of Mar 31, 2022, DK had cash and cash equivalents worth $854.1 million and long-term debt of $2,130.7 million, with debt to total capital of about 69.4%.

Guidance

Delek projects the second-quarter 2022 crude oil throughput to average between 280,000 and 290,000 barrels per day or roughly 94% utilization at the midpoint.

For full-year 2022, Delek maintains the capital expense guidance of around the $250-$260 million range, excluding capital spending associated with the planned 3Bear acquisition that is expected to close around mid-year.

The company mentioned that it is looking at a dividend payout and a share buyback in the second quarter or the third quarter after second-quarter results are declared.


 

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 107.16% due to these changes.

VGM Scores

At this time, Delek US Holdings has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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. It comes with little surprise Delek US Holdings has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Delek US Holdings belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, Valero Energy (VLO Quick QuoteVLO - Free Report) , has gained 3.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Valero Energy reported revenues of $38.54 billion in the last reported quarter, representing a year-over-year change of +85.2%. EPS of $2.31 for the same period compares with -$1.73 a year ago.

For the current quarter, Valero Energy is expected to post earnings of $5.62 per share, indicating a change of +1070.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +16.5% over the last 30 days.

Valero Energy has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.