Delek US Holdings, Inc. (NYSE: DK)

Sector: Energy Industry: Oil & Gas Refining & Marketing CIK: 0001694426
Market Cap 2.42 Bn
P/B 2.42
P/E 7.69
P/S 0.13
ROIC (Qtr) -5.92
Div Yield % 3.10
Rev 1y % (Qtr) -5.11
Total Debt (Qtr) 3.59 Bn
Debt/Equity (Qtr) 19.82
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About

Delek US Holdings, Inc., often recognized by its stock symbol DK, is a prominent player in the energy industry, specifically in the petroleum refining, logistics, and retail segments. The company was established in 2016 and has its headquarters in Brentwood, Tennessee. Delek US Holdings, Inc. operates through three primary segments: refining, logistics, and retail. The refining segment is the largest and most profitable, contributing approximately 70% of the company's total revenue. This segment includes four independent refineries located in Texas,...

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Investment thesis

Bull case

  • Healthy cash reserves of 630.90M provide 15.89x coverage of short-term debt 39.70M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong free cash flow of (725.80M) provides 3.55x coverage of acquisition spending (204.20M), indicating disciplined M&A strategy.
  • Free cash flow of (725.80M) provides excellent 11.56x coverage of dividends (62.80M), indicating sustainable shareholder returns.
  • Cash position of 630.90M provides exceptional 10.69x coverage of minority interest expenses 59M, indicating strong liquidity.
  • Tangible assets of 6.20B provide robust 6.73x coverage of other current liabilities 920.30M, indicating strong asset backing.

Bear case

  • Operating cash flow of (130.50M) barely covers its investment activities of (796.80M), with a coverage ratio of 0.16, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 630.90M provide limited coverage of acquisition spending of (204.20M), which is -3.09x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (130.50M) shows concerning coverage of stock compensation expenses of 74.30M, with a -1.76 ratio indicating potential earnings quality issues.
  • Free cash flow of (725.80M) provides weak coverage of capital expenditures of 595.30M, with a -1.22 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (245.10M) show weak coverage of depreciation charges of 447.30M, with a -0.55 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Oil & Gas Refining & Marketing
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MPC Marathon Petroleum Corp 142.92 Bn 53.05 1.86 34.20 Bn
2 VLO Valero Energy Corp/Tx 79.27 Bn 8.41 0.46 10.58 Bn
3 PSX Phillips 66 70.22 Bn 27.51 0.54 21.76 Bn
4 SUN Sunoco LP 5.94 Bn 11.81 0.45 10.07 Bn
5 DINO HF Sinclair Corp 5.65 Bn 289.25 1.17 3.16 Bn
6 PBF PBF Energy Inc. 3.87 Bn -24.43 0.13 2.90 Bn
7 DK Delek US Holdings, Inc. 2.42 Bn 7.69 0.13 3.59 Bn
8 CVI Cvr Energy Inc 2.28 Bn 13.73 0.31 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.76 0.76
EV to Cash from Ops. EV/CFO 6.74 8.58
EV to Debt EV to Debt 1.49 2.22
EV to EBIT EV/EBIT 8.66 10.87
EV to EBITDA EV/EBITDA 5.88 9.19
EV to Free Cash Flow [EV/FCF] EV/FCF 16.17 10.02
EV to Market Cap EV to Market Cap 2.21 1.76
EV to Revenue EV/Rev 0.28 0.77
Price to Book Value [P/B] P/B 2.42 6.86
Price to Earnings [P/E] P/E 7.69 34.12
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -8.20 -0.72
Dividend Payout Ratio % Div Payout % (Qtr) -12.70 28.49
Dividend per Basic Share Div per Share (Qtr) 1.02 1.75
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -8.46 -37.85
Interest Coverage Int. cover (Qtr) -0.74 1.50
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -99.63 -33.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -39.20 150.03
Dividend Growth (1y) % Div 1y % (Qtr) 3.03 1.78
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -232.35 -40.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 5.69 451.72
EBIT Growth (1y) % EBIT 1y % (Qtr) -183.35 -35.27
EBT Growth (1y) % EBT 1y % (Qtr) -40.93 -53.20
EPS Growth (1y) % EPS 1y % (Qtr) -68.27 -26.82
FCF Growth (1y) % FCF 1y % (Qtr) -555.65 12.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 514.18 31.60
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.51 2.36
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.42
Cash Ratio Cash Ratio (Qtr) 0.23 0.39
Current Ratio Curr Ratio (Qtr) 0.86 1.41
Debt to Equity Ratio Debt/Equity (Qtr) 19.82 10.15
Interest Cover Ratio Int Coverage (Qtr) -0.74 1.50
Times Interest Earned Times Interest Earned (Qtr) -0.74 1.50
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.90 6.34
EBIT Margin % EBIT Margin % (Qtr) -2.30 1.61
EBT Margin % EBT Margin % (Qtr) -5.41 -2.36
Gross Margin % Gross Margin % (Qtr) 2.30 12.04
Net Profit Margin % Net Margin % (Qtr) -4.80 -3.21