DELEK LOGISTICS PARTNERS, LP (DKL): what the price requires

At today's price, DELEK LOGISTICS PARTNERS, LP (DKL) is priced for +7.5% 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 · Source: https://boothcheck.com/report/DKL

Headline

FieldValue
TickerDKL
CompanyDELEK LOGISTICS PARTNERS, LP
Current price$55.06/sh
CompositionService Revenue - Third Party 8% / Service Revenue - Affiliate 10% / Product Revenue - Third Party 43% / Product Revenue - Affiliate 18% / Lease Revenue - Affiliate 21%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed10.7%
Operating margin today17.6%
Margin compression implied-6.9pp
Implied growth7.5%
Multiple paid27x 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 ~8.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.1 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.19σ
cohort percentile (of 45 peers)80
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

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—
Earnings1.06x1expensive
Relative0.51x3justifies
Growth0.68x2justifies

Families that justify the price: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.5%); the inversion above states its own rate.

Per-Model Detail (n=6)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$168.470.33xyesExit EV/EBITDA: 9.8x / 11.8x / 13.8x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$108.190.51xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$53.141.04xyesRev $1.1B, growth 14% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.3x / 1.5x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$51.701.06xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.20B × (1−21%) / WACC 4.5% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$57.660.95xyesEBITDA $0.31B × sector EV/EBITDA 12.0x
FCF YieldEarnings$0.015506.00xyesFCF $115.1M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$108.190.51xyesRevenue $1.06B × sector P/S 2.5x
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$2.3b
Net debt / NOPAT (after-tax)15.80x
Net debt / operating income (pre-tax)12.48x
Interest coverage1.0x
Burning cashno

Bullet Takeaways

Adjusted EBITDA has been climbing, reaching $132.3 million in the first quarter of 2026 from $123.2 million a year earlier, and the partnership reaffirmed full-year 2026 adjusted EBITDA guidance of $520 million to $560 million. Operating margin runs near 16%, well above the thin margins of its refining sponsor.

At about $50 a unit the market is paying roughly 25 times company-wide operating income, which inverts to an embedded assumption of about 6% operating-profit growth a year for five years. That is a real growth bar for a fee-based midstream business, not a flat-line.

The partnership has now raised its distribution for 53 consecutive quarters, to $1.130 a unit, but it carries about $2.3 billion of net debt against only $10 million of liquid assets and trailing interest coverage near 0.9 times, so the growth and the payout both lean on continued access to capital.

Bull Case

The trajectory is the story here, and it has been pointing up. Adjusted EBITDA rose to $132.3 million in the first quarter of 2026 from $123.2 million a year earlier, and that came despite roughly $10 million of headwinds from Winter Storm Fern, which cut crude gathering volumes in the Delaware Basin. The partnership held its full-year 2026 adjusted EBITDA guidance of $520 million to $560 million and described its confidence in reaching it as high. Revenue has been growing at a mid-teens pace, operating margin sits near 16%, and the business converts that into a distribution it has now raised for 53 straight quarters, most recently to $1.130 per unit. For a midstream operator, that combination of rising EBITDA and an unbroken payout record is the franchise.

The quality of those cash flows is what supports the price. This is a fee-based, contracted logistics business sitting on top of refining and production volumes, not a commodity-price bet. The economics resemble what larger midstream peers describe in their own filings, where long-term contracts carry fixed fees that reserve capacity regardless of how much actually flows (Kinder Morgan FY2025 10-K, accession 0001506307-26-000011). The revenue mix is shifting toward third parties: management expects more than 80% of 2026 EBITDA to come from outside the sponsor, which both diversifies the customer base and raises the standalone valuation visibility of the unit.

That is why the priced-in assumption looks like a value-and-asset story rather than a pure growth gamble. At about $50 (June 27, 2026) the market pays roughly 25 times operating income, implying about 6% operating-profit growth a year for five years. The partnership has a concrete plan to fund that growth: $180 million to $190 million of planned capital spending is expected to generate roughly $75 million of incremental run-rate EBITDA, and it has already drilled its first acid-gas injection well in the Delaware Basin as part of a sour-gas handling solution. Earnings power, relative-multiple, and growth-DCF approaches all land at or near the current price, which means the price is broadly supported by the methods rather than reaching beyond them. Raymond James reflected that constructive read by lifting its target to $60 with an Outperform rating.

Bear Case

The fragile assumption baked into the price is that the partnership can keep funding both growth and a rising distribution without the balance sheet getting in the way. The numbers say that is not free. Net debt is about $2.3 billion against only $10 million of liquid assets, leverage runs above 13 times trailing operating income, and trailing interest coverage is roughly 0.9 times, meaning operating income barely covers interest before any capital spending or distribution. A master limited partnership that raises its payout every quarter and spends $180 million to $190 million a year on growth while earning under one turn of interest coverage is running on the assumption that capital markets stay open and rates behave. That is the single most fragile input in the thesis.

The second fragile assumption is the durability of the implied 6% operating-profit growth that the 25 times operating-income multiple requires. The growth case rests on incremental EBITDA from new projects and on the continued shift to third-party volumes, and both depend on customer drilling activity, on the Delaware Basin staying active, and on the sponsor separation proceeding as planned. Distributable cash flow as adjusted actually slipped to $72.4 million from $75.1 million a year earlier, mostly on the winter-storm hit, a reminder that the volumes underneath the fees are weather-sensitive and not perfectly contracted. If basin activity slows or a project comes in below its planned EBITDA contribution, the growth that justifies the multiple thins out.

The third caution is structural. Because this is a partnership with negative book equity and an earnings line the standard models read as non-positive, several of the asset-based and earnings-yield methods cannot run at all, leaving a thinner set of valuation anchors than usual. The methods that do run rely heavily on EBITDA multiples and forward cash flow, which are exactly the inputs most sensitive to the leverage and growth assumptions above. A unit that trades for its distribution and its growth narrative is a unit whose price falls fastest if either the payout coverage or the growth runway is questioned.

Valuation

At about $50 a unit the price inverts to roughly 25 times company-wide operating income and an embedded assumption of about 6% operating-profit growth a year for five years. Against the partnership's own recent results that pace is within range; revenue has been compounding in the mid-teens and EBITDA is rising, so the implied growth is demanding but not extreme. The solve runs at a 7% cost of capital with 4% terminal growth, and it is sensitive: each percentage point of cost of capital moves the implied growth by roughly 8.8 points, so the figure should be read as approximate.

The model set is thinner than for an ordinary corporation because this is a partnership with negative book equity. The asset-based and earnings-yield methods cannot run, and the dividend models are gated out because the engine does not read partnership distributions as a conventional yield. What remains clusters near the price: the earnings-power value lands near $57, the EV/EBITDA relative method near $58, and the future-market-cap projection near $48. The exit-multiple DCF prints higher at around $164 because it extends today's EBITDA multiple over a six-year horizon, and the price-to-sales fallback near $108 is excluded because it rewards revenue without regard to margin.

The pattern is that the methods which take current earnings power and EBITDA seriously land right around the current price, which is why the priced-in read is value-and-asset supported rather than a stretch. The bet at $50 is therefore that the contracted fee streams hold, that the growth projects deliver their planned EBITDA, and that the balance sheet stays serviceable, not that the units are cheap relative to what the business already earns.

Catalysts

First-quarter 2026 results, reported April 29, were the most recent catalyst. Net income was $32.4 million, or $0.60 per diluted unit, on net revenues of $297.5 million, with adjusted EBITDA rising to $132.3 million from $123.2 million a year earlier even after roughly $10 million of Winter Storm Fern headwinds. The partnership declared its 53rd consecutive quarterly distribution increase to $1.130 per unit and reaffirmed full-year 2026 adjusted EBITDA guidance of $520 million to $560 million. Raymond James raised its target to $60 from $57 with an Outperform rating.

The forward catalysts center on growth execution and the sponsor separation. Planned 2026 growth capital of $180 million to $190 million is expected to yield about $75 million of incremental run-rate EBITDA, and the first acid-gas injection well in the Delaware Basin advances a sour-gas handling solution that could add fee-based volumes. The shift toward more than 80% third-party EBITDA supports the broader plan to deconsolidate from the refining sponsor and let the unit be valued on its own. The watch items are the next quarterly distribution and its coverage, Delaware Basin volume trends, progress on the growth projects hitting their EBITDA targets, and the pace of the separation from Delek US.

Peer Cohorts (Per Segment, With Filing Citations)

Gathering and Processing / Wholesale Marketing and Terminalling / Storage and Transportation (reported)

Investments in Pipeline Joint Ventures (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 DKL report on boothcheck