Delek US Holdings, Inc. (NYSE:DK) just released its latest second-quarter results and things are looking bullish. Results overall were solid, with revenues arriving 3.4% better than analyst forecasts at US$3.4b. Higher revenues also resulted in substantially lower statutory losses which, at US$0.58 per share, were 3.4% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Delek US Holdings' nine analysts is for revenues of US$12.1b in 2024, which would reflect a disturbing 22% decline in revenue compared to the last year of performance. Losses are forecast to balloon 26% to US$2.07 per share. Before this earnings announcement, the analysts had been modelling revenues of US$13.0b and losses of US$2.38 per share in 2024. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a favorable reduction in losses per share in particular.
The consensus price target was broadly unchanged at US$24.46, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Delek US Holdings analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$18.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 39% annualised decline to the end of 2024. That is a notable change from historical growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.9% per year. It's pretty clear that Delek US Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Delek US Holdings analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Delek US Holdings (including 1 which is a bit concerning) .
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