Delek US Holdings (NYSE: DK) operates as a diversified energy company with a focus on petroleum refining and logistics. The company runs four refineries across Texas, Arkansas, and Louisiana with a combined capacity of 302,000 barrels per day. It also owns Delek Logistics Partners, a master limited partnership that handles midstream operations, including pipelines, storage terminals, and water disposal services. (Marc evaluated the partnership and its double-digit yield in his Safety Net column in March.) Looking at Delek US Holdings' stock chart tells a sobering story. After trading above $30 in early 2024, shares have tumbled dramatically to around $21. That's a painful drop of roughly 30%. The company's recent first quarter results help explain the stock's poor performance. Delek reported a net loss of $172.7 million, or $2.78 per share - a sharp deterioration from the $32.6 million loss in the same quarter last year. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) fell to just $26.5 million compared with $158.7 million in Q1 of 2024. What's driving these disappointing numbers? The main culprit is the company's refining business, which has been hammered by lower crack spreads. During the first quarter, Delek's benchmark crack spreads were down nearly 30% from prior-year levels. This squeezed the company's ability to generate profits from turning crude oil into gasoline and diesel. Delek's refining segment posted an adjusted EBITDA loss of $27.4 million versus a $110.1 million gain last year. Meanwhile, its logistics operations provided some relief with adjusted EBITDA of $116.5 million, up from $99.7 million. Management is taking steps to improve the situation. They're pushing forward with their Enterprise Optimization Plan, which they expect will deliver at least $120 million in cash flow improvements by the second half of 2025. The company is also working to reduce its ownership in Delek Logistics Partners as part of a broader strategy to unlock value. Delek US Holdings' steep drop and recent rebound - not to mention all the uncertainty surrounding the Middle East and the energy sector - beg the question: Is the stock worth a look at current prices? Let's run it through The Value Meter to find out. |
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