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.
最近對Delek US Holdings來說更具優勢,因爲其收入的下降幅度沒有該行業其他公司那麼大。許多人可能預計,相對優異的收入表現將大幅下滑,這抑制了市銷率。因此,儘管你可以說該股很便宜,但投資者在將其視爲物有所值之前會尋求改善。話雖如此,如果公司的收入繼續超過該行業,現有股東可能不會對股價感到悲觀。
如果你想了解分析師對未來的預測,你應該查看我們關於德萊克美國控股的免費報告。
預計德萊克美國控股公司的收入會增長嗎?
Delek US Holdings的市銷率對於一家預計增長有限,而且重要的是表現不如行業的公司來說是典型的。