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Delek US Holdings (DK) Up 24.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have added about 24.3% 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 drivers.
Delek US Q4 Earnings Miss Estimates, Sales Decline Y/Y
Delek US Holdings reported fourth-quarter 2023 adjusted net loss of $1.46 per share, wider than the Zacks Consensus Estimate of a loss of $1.28. The figure also deteriorated from the year-ago quarter’s profit of 88 cents per share. The underperformance could be attributed to the Refining segment's weak year-on-year contributions.
Net revenues decreased 9.6% year over year to $4 billion. The figure, however, beat the consensus mark of $3.8 billion due to record contributions from the Retail and Logistics segments.
The diversified downstream energy company’s Adjusted EBITDA came in at $60.6 million compared with $209.8 million in the year-ago period.
On Feb 20, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24.5 cents per share. The dividend will be paid out on Mar 20, 2024, to shareholders of record as of Mar 1, 2024.
DK distributed $35.4 million to shareholders through dividends and share buybacks during this reported quarter. Throughout the year, DK returned $145.7 million to shareholders through dividends and share buybacks.
Segmental Performances
Refining: The segment's Adjusted EBITDA was ($10.4 million), indicating a decline from the prior-year quarter's profit of $170.9 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 50.7% during the period. The reported figure missed our prediction of a profit of $101.1 million.
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, Logistics managed to set a new record. It registered an adjusted EBITDA of $99.4 million compared with $90.6 million in the year-ago quarter. The figure beat our projection of $68.3 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 $9.3 million during the reported quarter compared with $7.8 million in the year-ago period. The figure beat our projection of $10.9 million.
The rise was mainly fueled by increased margins within stores and the overall volume of retail fuel gallons sold during this quarter.
Merchandise sales of $74.4 million declined from the year-ago quarter’s reported figure of $77.4 million. However, the figure missed our estimate by 2%. The merchandise margin increased to 33.3% from the year-ago quarter's reported figure of 32.1%.
DK’s retail stations sold 43,631 thousand gallons of gasoline compared with 41,523 in the corresponding period of 2022.
Financials
Total operating expenses in the fourth quarter decreased about 8.6% year over year to $4.2 billion. Delek spent $372 million on capital programs in the same time frame.
As of Dec 31, 2023, the company had cash and cash equivalents worth $822.2 million and long-term debt of $2.6 billion, with debt to total capital of about 72.7%.
Guidance
For full-year 2024, Delek expects capital expenditures of approximately $330 million as it plans to spend $220 million on Refining, $70 million on Logistics (Delek Logistics Partners), $15 million on Retail and $25 million on Corporate/Other.
For the first quarter, the company anticipates operating costs in the band of $215-$225 million, general and administrative expenses in the range of $60-$65 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
DK anticipates a total crude throughput of 269,000-281,000 barrels per day (bpd) and a total throughput of 289,000-301,000 bpd during the same time frame.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -16.16% due to these changes.
VGM Scores
Currently, Delek US Holdings has a poor Growth Score of F, however its Momentum Score is doing a lot better 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 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 broadly trending upward 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 belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, PBF Energy (PBF - Free Report) , has gained 22.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
PBF Energy reported revenues of $9.14 billion in the last reported quarter, representing a year-over-year change of -15.7%. EPS of -$0.41 for the same period compares with $4.41 a year ago.
PBF Energy is expected to post earnings of $0.53 per share for the current quarter, representing a year-over-year change of -80.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.5%.
PBF Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Delek US Holdings (DK) Up 24.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Delek US Holdings (DK - Free Report) . Shares have added about 24.3% 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 drivers.
Delek US Q4 Earnings Miss Estimates, Sales Decline Y/Y
Delek US Holdings reported fourth-quarter 2023 adjusted net loss of $1.46 per share, wider than the Zacks Consensus Estimate of a loss of $1.28. The figure also deteriorated from the year-ago quarter’s profit of 88 cents per share. The underperformance could be attributed to the Refining segment's weak year-on-year contributions.
Net revenues decreased 9.6% year over year to $4 billion. The figure, however, beat the consensus mark of $3.8 billion due to record contributions from the Retail and Logistics segments.
The diversified downstream energy company’s Adjusted EBITDA came in at $60.6 million compared with $209.8 million in the year-ago period.
On Feb 20, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24.5 cents per share. The dividend will be paid out on Mar 20, 2024, to shareholders of record as of Mar 1, 2024.
DK distributed $35.4 million to shareholders through dividends and share buybacks during this reported quarter. Throughout the year, DK returned $145.7 million to shareholders through dividends and share buybacks.
Segmental Performances
Refining: The segment's Adjusted EBITDA was ($10.4 million), indicating a decline from the prior-year quarter's profit of $170.9 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 50.7% during the period. The reported figure missed our prediction of a profit of $101.1 million.
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, Logistics managed to set a new record. It registered an adjusted EBITDA of $99.4 million compared with $90.6 million in the year-ago quarter. The figure beat our projection of $68.3 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 $9.3 million during the reported quarter compared with $7.8 million in the year-ago period. The figure beat our projection of $10.9 million.
The rise was mainly fueled by increased margins within stores and the overall volume of retail fuel gallons sold during this quarter.
Merchandise sales of $74.4 million declined from the year-ago quarter’s reported figure of $77.4 million. However, the figure missed our estimate by 2%. The merchandise margin increased to 33.3% from the year-ago quarter's reported figure of 32.1%.
DK’s retail stations sold 43,631 thousand gallons of gasoline compared with 41,523 in the corresponding period of 2022.
Financials
Total operating expenses in the fourth quarter decreased about 8.6% year over year to $4.2 billion. Delek spent $372 million on capital programs in the same time frame.
As of Dec 31, 2023, the company had cash and cash equivalents worth $822.2 million and long-term debt of $2.6 billion, with debt to total capital of about 72.7%.
Guidance
For full-year 2024, Delek expects capital expenditures of approximately $330 million as it plans to spend $220 million on Refining, $70 million on Logistics (Delek Logistics Partners), $15 million on Retail and $25 million on Corporate/Other.
For the first quarter, the company anticipates operating costs in the band of $215-$225 million, general and administrative expenses in the range of $60-$65 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
DK anticipates a total crude throughput of 269,000-281,000 barrels per day (bpd) and a total throughput of 289,000-301,000 bpd during the same time frame.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -16.16% due to these changes.
VGM Scores
Currently, Delek US Holdings has a poor Growth Score of F, however its Momentum Score is doing a lot better 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 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 broadly trending upward 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 belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, PBF Energy (PBF - Free Report) , has gained 22.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
PBF Energy reported revenues of $9.14 billion in the last reported quarter, representing a year-over-year change of -15.7%. EPS of -$0.41 for the same period compares with $4.41 a year ago.
PBF Energy is expected to post earnings of $0.53 per share for the current quarter, representing a year-over-year change of -80.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.5%.
PBF Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.