When close to half the companies operating in the Oil and Gas industry in the United States have price-to-sales ratios (or "P/S") above 1.7x, you may consider Delek US Holdings, Inc. (NYSE:DK) as an attractive investment with its 0.1x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
How Has Delek US Holdings Performed Recently?
Recent times have been more advantageous for Delek US Holdings as its revenue hasn't fallen as much as the rest of the industry. It might be that many expect the comparatively superior revenue performance to degrade substantially, which has repressed the P/S. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value. In saying that, existing shareholders probably aren't pessimistic about the share price if the company's revenue continues outplaying the industry.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Delek US Holdings.
Is There Any Revenue Growth Forecasted For Delek US Holdings?
Delek US Holdings' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 8.1%. Even so, admirably revenue has lifted 125% in aggregate from three years ago, notwithstanding the last 12 months. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.
Turning to the outlook, the next three years should bring diminished returns, with revenue decreasing 15% per annum as estimated by the eleven analysts watching the company. With the industry predicted to deliver 2.8% growth each year, that's a disappointing outcome.
In light of this, it's understandable that Delek US Holdings' P/S would sit below the majority of other companies. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.
What Does Delek US Holdings' P/S Mean For Investors?
Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of Delek US Holdings' analyst forecasts revealed that its outlook for shrinking revenue is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless there's material change, it's hard to envision a situation where the stock price will rise drastically.
And what about other risks? Every company has them, and we've spotted 5 warning signs for Delek US Holdings (of which 2 can't be ignored!) you should know about.
If you're unsure about the strength of Delek US Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
最近对Delek US Holdings来说更具优势,因为其收入的下降幅度没有该行业其他公司那么大。许多人可能预计,相对优异的收入表现将大幅下滑,这抑制了市销率。因此,尽管你可以说该股很便宜,但投资者在将其视为物有所值之前会寻求改善。话虽如此,如果公司的收入继续超过该行业,现有股东可能不会对股价感到悲观。
如果你想了解分析师对未来的预测,你应该查看我们关于德莱克美国控股的免费报告。
预计德莱克美国控股公司的收入会增长吗?
Delek US Holdings的市销率对于一家预计增长有限,而且重要的是表现不如行业的公司来说是典型的。