Delek US Holdings, Inc. (DK): what the price requires

At today's price, Delek US Holdings, Inc. (DK) is priced for +4.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/DK

Headline

FieldValue
TickerDK
CompanyDelek US Holdings, Inc.
Current price$58.15/sh
CompositionRefining 95% / Logistics 5%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed1.5%
Operating margin today2.3%
Margin compression implied-0.8pp
Implied growth4.0%
Multiple paid23x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.6pp (computed at the 7% minimum rate; the CAPM rate 6.4% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~21.4%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.83σ
cohort percentile (of 31 peers)74
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings1.80x2expensive
Relative0.27x3justifies
Growth0.94x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.7%); the inversion above states its own rate.

Per-Model Detail (n=8)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$61.950.94xyesFCF base $0.5B, growth -5% (input: historical growth), terminal g 0.5%, WACC 6.7%, 5yr projection
DCF Exit MultipleGrowth$69.850.83xyesExit EV/EBITDA: 4.5x / 9.5x / 14.5x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$213.770.27xyesP/S fallback (negative EPS): Sector P/S 1.2x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$0.8766.84xyesReference only (book value floor): BV/sh $0.87, ROE negative (excluded from median)
Two-Stage Excess ReturnAsset$0.7874.55xyesReference only (book value with convergence): BV/sh $0.87, ROE converges to ke (excluded from median)
Discounted Future Market CapGrowth$30.851.88xyesRev $10.7B, growth -5% (input: historical growth; tapered), Terminal P/S: 0.2x / 0.3x / 0.4x (bear / base = today's held flat / bull, cap 6x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.015815.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.12B × (1−21%) / WACC 6.7% → EPV (no growth) (excluded from median)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$20.682.81xyesEBITDA $0.65B × sector EV/EBITDA 6.0x
FCF YieldEarnings$41.951.39xyesFCF $477.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$26.302.21xyesSBC-adj FCF $0.39B (FCF $0.48B − SBC $0.09B) capitalized at Kₑ
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$213.770.27xyesRevenue $10.73B × sector P/S 1.2x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.6b
Net debt / NOPAT (after-tax)13.09x
Net debt / operating income (pre-tax)10.34x
Share count CAGR (buyback)-4.9%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

At about $41 the stock is paying roughly 19 times company-wide operating income, which works out to an embedded assumption of roughly negative 1% operating-profit growth a year for five years. That is a low bar for a refiner whose trailing operating income of $248 million was set during a weak window for crack spreads.

The balance sheet carries about $3.2 billion of gross debt against $624 million of liquid assets, so net debt sits near $2.6 billion, or about 10 times trailing operating income. Most of that debt is structurally separable from the refining parent, because a large share of it lives at the publicly traded logistics affiliate.

The company is trying to widen the economic gap between the refining business and Delek Logistics so each can be valued on its own terms. Run-rate cost savings have been raised to about $220 million, and the logistics affiliate now expects more than 80% of its EBITDA from third parties.

Bull Case

Start with the balance sheet, because for a refiner it is the thing that decides whether you live to see the next up-cycle. Delek ended the latest period with about $624 million in liquid assets against roughly $3.2 billion of gross debt, for net debt near $2.6 billion. On the surface that is about 10 times trailing operating income, which sounds heavy. The detail that changes the read is where the debt sits. A large slice of it lives at Delek Logistics Partners, the publicly traded affiliate, whose cash flows are fee-based and increasingly third-party. The parent refining business is carrying far less than the consolidated figure implies, and management has spent the last year deliberately widening that separation, lifting third-party EBITDA at the logistics unit above 80% of its total so the two pieces can stand on their own books.

That structure is why the priced-in assumption looks beatable. At about $41 (June 27, 2026) the market is paying roughly 19 times company-wide operating income, which inverts to roughly negative 1% operating-profit growth a year for five years. The catch is that the $248 million of trailing operating income that anchors that multiple was earned in a soft refining window. When crack spreads turned, the swing was violent: first-quarter 2026 adjusted EBITDA came in at $211.7 million against $33.6 million a year earlier, as benchmark crack spreads rose roughly 64% year over year, and adjusted earnings flipped to a small profit from a consensus loss. A normalized mid-cycle earnings base sits well above the trailing number the multiple is built on, so the price is effectively underwriting that the recent weak trailing print is the run rate. The sensitivity is real and cuts both ways, but the door it leaves open is to the upside.

The self-help layer is the part that does not depend on crack spreads at all. Management raised the run-rate cash-flow target of its optimization program to about $220 million and expects roughly $60 million of that to land in 2026 profit. Combined with the logistics separation, the strategy is to convert a complicated consolidated entity into two cleaner, separately valued businesses, and the cash it throws off when margins cooperate has already funded buybacks, with about 585,565 shares repurchased for $20 million in the final quarter of 2025. Peers like PBF Energy disclose the same crack-spread leverage in their filings, noting margin swings driven by product prices and inventory effects (PBF FY2025 10-K, accession 0001534504-26-000010); Delek's version of that leverage is paired with a balance-sheet simplification the others are not running.

Bear Case

The variable with the most leverage on this thesis is the one Delek does not control: the crack spread. Refining is a margin business sitting on top of two commodity prices the company cannot set, and the swing in its own results proves the point. First-quarter adjusted EBITDA went from $33.6 million to $211.7 million in a single year almost entirely because benchmark crack spreads rose about 64%. The same arithmetic runs in reverse. A return to the weak spreads of early 2025 takes the earnings base back toward the trailing $248 million of operating income that already looks thin against the debt load, and the small refinery exemptions that helped the quarter are a regulatory benefit that can be revisited rather than a durable margin source. The current price does not obviously discount a normal cyclical downturn; it reads closer to a mid-cycle that holds.

The balance sheet is the place that sensitivity becomes dangerous. Net debt near $2.6 billion against $624 million of liquid assets and roughly $248 million of trailing operating income leaves little room if margins compress for more than a couple of quarters. Interest expense is not separately broken out in the latest filings, so coverage cannot be cleanly computed, which is itself a reason for caution rather than comfort. Trailing operating margin is about 2.3%, so there is almost no buffer between a working refinery and a cash-consuming one. Book value per share is under a dollar and return on equity is negative, which is why the asset-based and earnings-power models in the X-ray collapse toward zero and have to be set aside entirely.

The valuation models that survive disagree sharply, and the honest reading favors the cautious ones. The DCF approaches that do anchor on cash flow land closer to the high $50s to low $70s, and the future-market-cap model, which taper-projects a declining top line, lands in the low $20s. The spread across methods is wide, which means the central estimate carries less weight, and the methods that take the thin margins seriously are the ones pointing lowest. The sum-of-parts separation is a sensible plan, but plans that depend on capital-markets receptivity and a cooperative commodity backdrop have a way of slipping when the cycle turns.

Valuation

At about $41 the price inverts to roughly 19 times company-wide operating income and an embedded assumption of about negative 1% operating-profit growth a year for five years. Against the company's own recent history that pace is within range; the stretch is less in the rate than in how long a soft trailing base is assumed to persist. The solve runs at a 7% cost of capital with 4% terminal growth over a five-year stage, and it is sensitive: each percentage point of cost of capital moves the implied growth by roughly 7.7 points, so the read should be held loosely.

The model X-ray is unusually scattered, which is normal for a thin-margin cyclical with negative trailing earnings. The earnings-power and asset-based methods produce values near zero because book value per share is under a dollar and return on equity is negative, so they are reference points rather than anchors and are excluded from the central estimate. The cash-flow methods carry the weight here: the perpetual-growth DCF lands near $72 and the exit-multiple DCF near $59, while the FCF-yield method, capitalizing roughly $478 million of free cash flow, sits close to the current price at about $42. The relative methods split widely, with EV/EBITDA at sector multiples landing near $21 and the price-to-sales fallback at over $200, the latter excluded because it rewards a large but barely profitable revenue line.

The takeaway is not a target. It is that the price sits inside a band the cash-flow methods can support if mid-cycle margins return, while the methods that respect today's 2.3% operating margin point lower. The bet at $41 is therefore a bet on the refining cycle and on the optimization and separation plans converting trailing weakness into a normalized base, not a bet on a cheap asset that is already earning its keep.

Catalysts

First-quarter 2026 results, reported April 29, were the clearest near-term catalyst. Adjusted EBITDA of $211.7 million was up sharply from $33.6 million a year earlier, revenue of $2.7 billion beat consensus by about 27%, and adjusted earnings of 8 cents a share landed against a consensus loss estimate, driven by crack spreads up roughly 64% year over year and small refinery exemptions. The print triggered a wave of price-target increases: Goldman Sachs initiated at Buy with a $55 target, Mizuho raised to $60, Raymond James to $54, Citi to $44, UBS to $48, and TD Cowen to $44, leaving a consensus around $51 with an average rating of Buy.

The structural catalyst is the sum-of-parts separation. Management raised the run-rate target of its Enterprise Optimization Plan to about $220 million, expects roughly $60 million of P&L contribution in 2026, and continues to increase the economic separation between Delek US and Delek Logistics, with the logistics affiliate guiding to 2026 adjusted EBITDA of $520 million to $560 million and more than 80% third-party sourcing. The watch items are the next earnings date and quarterly crack-spread direction, the pace of the DK and DKL separation, continued buyback activity after the $20 million repurchase in late 2025, and any change to the small refinery exemption regime that flattered the recent quarter.

Peer Cohorts (Per Segment, With Filing Citations)

Refining (reported)

Logistics (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive DK report on boothcheck