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Delek US Holdings (DK) Up 1% 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 1% in that time frame, underperforming 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 Q2 Loss Narrower Than Expected, Sales Decline Y/Y
Delek US Holdings reported second-quarter 2024 adjusted net loss of 92 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.42, owing to lower year-over-year operating costs. However, the figure deteriorated from the year-ago quarter’s profit of $1 per share. The loss was due to the Refining and Retail segment's weak year-on-year contributions.
Net revenues decreased 18.4% year over year to $3.4 billion. However, the figure beat the Zacks Consensus Estimate of $3.1 billion, driven by strong contributions from the Logistics segment.
The diversified downstream energy company’s adjusted EBITDA came in at $107.5 million compared with $259.4 million in the year-ago period.
Segmental Performances
Refining: The segment's adjusted EBITDA was $42.1 million, indicating a decline from the prior-year quarter's profit of $212.4 million. This significant year-over-year decline was due to lower refining crack spreads. In the second quarter of 2024, DK's benchmark crack spreads fell by an average of 21.2% from prior-year levels. Additionally, the reported figure missed our estimate of $78.8 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.
In the second quarter, the segment registered an adjusted EBITDA of $100.6 million compared with $90.9 million in the year-ago quarter. However, the figure missed our projection of $105.6 million. The year-over-year growth can be attributed to the robust contributions from the Delaware Gathering systems and annual rate hikes.
Retail: The segment registered an adjusted EBITDA of $12.4 million in the last reported quarter compared with $15 million in the year-ago period. The year-over-year decline was due to lower sales caused by remodeling activities and reduced margins. However, the figure marginally beat our projection of $12.2 million.
Merchandise sales of $79.6 million declined from the year-ago quarter’s reported figure of $84.3 million. The figure also missed our estimate by 2.7 %. Additionally, the merchandise margin decreased to 32.9% from the year-ago quarter's reported figure of 33.9%.
Oil and gas refining and marketing company’s retail stations sold 43,126 thousand gallons of gasoline compared with 45,687 in the corresponding period of 2023.
Financials
Total operating expenses in the second quarter decreased about 17.8% year over year to $3.37 billion. Delek spent $70.8 million on capital programs in the same time frame.
As of Jun 30, 2024, the company had cash and cash equivalents worth $657.9 million and long-term debt of $2.5 billion, with debt to total capital ratio of about 71.4%.
2024 Guidance
For 2024, the integrated downstream energy company expects capital expenditures of $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 third quarter, the company anticipates operating costs in the band of $205-$215 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-$90 million range.
The company anticipates a total crude throughput of 290,000-305,000 barrels per day (bpd) and a total throughput of 301,000-315,000 bpd in the same time frame.
The company expects to process 74,000-77,000 barrels of crude oil per day at its Tyler, TX, refinery in the third quarter. The El Dorado, AR, refinery is expected to process 79,000-82,000 barrels of per day (bpd). The Big Spring, TX, refinery is expected to process 69,000 bpd to 73,000 bpd and the Krotz Springs, LA, refinery is expected to process 79,000 bpd to 83,000 bpd.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -96.39% due to these changes.
VGM Scores
Currently, Delek US Holdings has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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 C. 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 belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, Murphy USA (MUSA - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Murphy USA reported revenues of $5.45 billion in the last reported quarter, representing a year-over-year change of -2.4%. EPS of $6.92 for the same period compares with $6.02 a year ago.
For the current quarter, Murphy USA is expected to post earnings of $7.13 per share, indicating a change of -7.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Murphy USA has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Delek US Holdings (DK) Up 1% 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 1% in that time frame, underperforming 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 Q2 Loss Narrower Than Expected, Sales Decline Y/Y
Delek US Holdings reported second-quarter 2024 adjusted net loss of 92 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.42, owing to lower year-over-year operating costs. However, the figure deteriorated from the year-ago quarter’s profit of $1 per share. The loss was due to the Refining and Retail segment's weak year-on-year contributions.
Net revenues decreased 18.4% year over year to $3.4 billion. However, the figure beat the Zacks Consensus Estimate of $3.1 billion, driven by strong contributions from the Logistics segment.
The diversified downstream energy company’s adjusted EBITDA came in at $107.5 million compared with $259.4 million in the year-ago period.
Segmental Performances
Refining: The segment's adjusted EBITDA was $42.1 million, indicating a decline from the prior-year quarter's profit of $212.4 million. This significant year-over-year decline was due to lower refining crack spreads. In the second quarter of 2024, DK's benchmark crack spreads fell by an average of 21.2% from prior-year levels. Additionally, the reported figure missed our estimate of $78.8 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.
In the second quarter, the segment registered an adjusted EBITDA of $100.6 million compared with $90.9 million in the year-ago quarter. However, the figure missed our projection of $105.6 million. The year-over-year growth can be attributed to the robust contributions from the Delaware Gathering systems and annual rate hikes.
Retail: The segment registered an adjusted EBITDA of $12.4 million in the last reported quarter compared with $15 million in the year-ago period. The year-over-year decline was due to lower sales caused by remodeling activities and reduced margins. However, the figure marginally beat our projection of $12.2 million.
Merchandise sales of $79.6 million declined from the year-ago quarter’s reported figure of $84.3 million. The figure also missed our estimate by 2.7 %. Additionally, the merchandise margin decreased to 32.9% from the year-ago quarter's reported figure of 33.9%.
Oil and gas refining and marketing company’s retail stations sold 43,126 thousand gallons of gasoline compared with 45,687 in the corresponding period of 2023.
Financials
Total operating expenses in the second quarter decreased about 17.8% year over year to $3.37 billion. Delek spent $70.8 million on capital programs in the same time frame.
As of Jun 30, 2024, the company had cash and cash equivalents worth $657.9 million and long-term debt of $2.5 billion, with debt to total capital ratio of about 71.4%.
2024 Guidance
For 2024, the integrated downstream energy company expects capital expenditures of $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 third quarter, the company anticipates operating costs in the band of $205-$215 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-$90 million range.
The company anticipates a total crude throughput of 290,000-305,000 barrels per day (bpd) and a total throughput of 301,000-315,000 bpd in the same time frame.
The company expects to process 74,000-77,000 barrels of crude oil per day at its Tyler, TX, refinery in the third quarter. The El Dorado, AR, refinery is expected to process 79,000-82,000 barrels of per day (bpd). The Big Spring, TX, refinery is expected to process 69,000 bpd to 73,000 bpd and the Krotz Springs, LA, refinery is expected to process 79,000 bpd to 83,000 bpd.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -96.39% due to these changes.
VGM Scores
Currently, Delek US Holdings has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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 C. 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 belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, Murphy USA (MUSA - Free Report) , has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Murphy USA reported revenues of $5.45 billion in the last reported quarter, representing a year-over-year change of -2.4%. EPS of $6.92 for the same period compares with $6.02 a year ago.
For the current quarter, Murphy USA is expected to post earnings of $7.13 per share, indicating a change of -7.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Murphy USA has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.