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

In the published model solve dated 2026-Q2, anchored at $55.70, DELEK LOGISTICS PARTNERS, LP (DKL) is priced for +8.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/DKL

Headline

What The Price Assumes (Inversion)

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

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.9% sits below it).

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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.

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.2%); the inversion above states its own rate.

Per-Model Detail (n=7)

Economic-Unit Decomposition (Sum Of The Parts)

The disclosed units share an operating capital structure; consolidated cash-flow lenses remain coherent and the unit split is explanatory.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• The product is the cash payment, and it went up again on July 22, 2026, to $1.135 per common unit for the second quarter, or $4.54 on an annualised basis.
• The single largest exposure is the parent, since the 10-K states that We are dependent upon Delek Holdings as our primary customer, and the loss of Delek Holdings as a customer would have a material adverse effect on our operating segments.
• The distribution is payable August 10 to holders of record on August 3, and the coverage question behind it is whether fee-base growth keeps outrunning an interest bill that currently absorbs most of operating profit.

Bull Case

Every quarter this partnership does one thing that its owners actually care about, and on July 22 it did it again, raising the distribution to $1.135 per common unit for the second quarter of 2026, an annualised rate of $4.54. Set against a unit price of $57.48, that is a high single-digit yield, paid quarterly, from assets that move liquids through pipes. The whole investment case starts and ends with whether that payment is durable and whether it keeps rising.

The contracts underneath it are built for exactly that. The 10-K describes commercial agreements that include minimum volume or throughput commitments by Delek Holdings, which we believe will provide a stable revenue stream in the future, and adds that The fees charged under our agreements with Delek Holdings and third parties are indexed to inflation-based indices. Minimum volumes mean the counterparty pays whether or not it ships. Inflation indexation means the fee schedule moves without anyone renegotiating. Those two features are what separate a midstream contract from a trucking rate.

The asset base has been growing by purchase rather than by hope. The partnership credits its H2O and Gravity acquisitions with driving revenue growth, and describes a Midland Basin position where the combined crude and water offering is appealing for our customers and brings additional growth opportunities to our system, plus a Delaware Basin business where it expects continued cash flow growth in 2026. Water gathering, disposal and recycling is unglamorous work that producers cannot avoid, and it scales with drilling activity rather than with the oil price directly.

Beyond the wholly owned system sits a portfolio of stakes. The partnership holds interests in four joint ventures, including the system running from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Texas Gulf Coast, and it is explicit that We do not directly earn revenues from our joint venture investments. Rather, we earn income (loss) from the equity method investment. Roughly 334 million dollars of carrying value sits in those holdings, a shade under 11% of the partnership's market value, earning through the income statement rather than the revenue line.

Financing capacity was reset this year. A new credit agreement provides revolving commitments of up to $1,300.0 million in aggregate, with sublimits of $150.0 million for letters of credit and $50.0 million for swing line loans, replacing the previous revolver and term loan and repaying their outstanding balances. For a partnership whose growth comes from buying assets, having a large undrawn facility with a fresh maturity profile is the difference between being able to act on a deal and having to watch it.

The revenue mix has also been shifting toward the more contractual end. Lease revenue rose to $57.2 million in the March quarter from $48.6 million a year earlier, and interest income recognised under sales-type lease accounting rose to $32.3 million from $22.5 million. That reclassification makes the headline revenue line look worse than the economics are, which is an unusual direction for accounting to run.

Bear Case

Exactly one family of valuation method reaches this unit price, and it is the one that projects cash flows forward and grows them. Every approach anchored to what the partnership currently reports lands far underneath: the price sits roughly 113% above where peer-multiple methods put it, and multiples of that gap above where the earnings-power methods land. That is not a subtle disagreement, and it has a single, identifiable cause.

The cause is interest. The partnership earns about $185 million a year at the operating line, and operating profit covers its interest bill roughly once over. Almost everything the pipes and terminals produce goes to lenders before a unitholder sees anything, which is why methods that capitalise reported earnings produce such small answers. The declared distribution, meanwhile, runs to approximately $240.8 million a year based on the units outstanding at December 31, 2025. Distributions in this structure are paid out of cash flow rather than accounting profit, so that is not an impossibility, but it does mean the payment depends on depreciation add-backs and on new assets arriving, not on earnings covering it.

Leverage is the reason the coverage is so tight. Net debt of roughly 2.31 billion dollars sits against liquid assets of about 10 million dollars, which is normal housekeeping for a partnership that sweeps cash to a revolver and abnormal only in how little margin it leaves. Measured against trailing operating income, net debt runs about 12.5 times operating profit.

Then there is the counterparty. Roughly half of revenue comes from affiliate agreements, and the partnership's own filing is unusually candid about what that means: Delek Holdings must devote a substantial portion of its cash flows from operations to service its debt and lease obligations, thereby reducing the availability of its cash flows to fund its growth strategy, including capital expenditures. A minimum volume commitment is only as good as the entity that signed it, and the entity that signed it is a mid-sized refiner carrying its own heavy interest load through a weak part of its cycle. The filing also warns that credit ratings may also be affected by Delek Holdings' level of indebtedness and creditworthiness, which is the same risk arriving through the financing door rather than the customer door.

The revenue mix is thinner than the midstream label suggests. Product revenue, which is buying and reselling barrels at a spread, is about 61% of the total across third-party and affiliate lines, while pure service revenue is roughly 18%. That shows up in profitability: the partnership converts about 17.6% of revenue into operating income, against WMB at 28.7% and KMI at 28.7%. AM, a gathering business with almost no marketing, converts 54.2%. Marketing revenue inflates the top line and dilutes the margin, and it is a materially less durable dollar than a tariff.

Against all that, the market is paying a multiple that sits at the very top of the midstream peer distribution, well beyond the upper quartile, for growth of roughly 8.6% a year in operating profit sustained over five years. The partnership has been delivering at that pace, so the requirement is not fantastical. But the answer is unusually sensitive to what return an owner demands: a single percentage point of extra required return moves the implied growth requirement by close to nine points. Buying the top multiple in a cohort, funded by leverage, with one customer supplying half the revenue, is a lot of things going right at once.

Valuation

Start with what an owner receives. A unit costs $57.48. The declared distribution rate is $4.54 a year, arriving in four instalments and just raised again. Now the other side of the same price: it works out to roughly 27 times what the partnership earns at the operating line, and that multiple carries a requirement of operating profit growing about 8.6% a year over a five-year stage. Those two facts describe the same instrument. The distribution is what an owner collects now; the growth requirement is what has to hold for it to keep arriving and keep rising.

Against its own record, that pace is unremarkable. This partnership has been growing at roughly that speed. Against its peer group it is a different picture: the multiple sits at the very top of the midstream distribution, well beyond the upper quartile. Paying the highest multiple in a cohort for a growth rate the cohort can also produce is the part of the setup that deserves scrutiny.

The methods divide sharply, and the division is informative rather than confusing. Only the forward cash-flow approaches reach the price. The peer-multiple approaches sit far below it, with the price about 113% above where they land, and the earnings-power approaches are further below still. The explanation is not that the assets are worthless. It is that interest consumes nearly all of the operating profit, so any method that starts from reported earnings and stops there produces a small number. Methods that project the fee base forward and discount it produce a large one. Both are describing the same partnership from opposite ends of the capital structure.

Inside the cash-flow group, the model that reaches highest holds today's enterprise-value-to-EBITDA multiple flat as its base case, compressing it in the bear scenario and expanding it in the bull. Worth noting what that assumes: today's multiple is not a depressed one, so holding it flat is a real assumption rather than a conservative default. The sales-multiple approach reaches a similar neighbourhood, and it is worth less attention here because roughly three fifths of revenue is bought-and-resold product rather than tariff.

The filed inputs the whole structure rests on are the contracts. Commercial agreements with the parent carry minimum volume or throughput commitments and fees indexed to inflation-based indices, and as of December 31, 2025 the partnership expected to recognise approximately $536.7 million of revenue from remaining performance obligations. That is contracted work already on the books, and it is the closest thing to a floor under the fee base.

Solvency is where the analysis has to end, because it is what determines whether the distribution survives a bad year. Net debt near 2.31 billion dollars, liquid assets of roughly 10 million dollars, operating profit covering interest about once over, and a newly sized revolving facility of up to $1,300.0 million describe a structure that works while volumes grow and gets uncomfortable quickly if they do not. Roughly 334 million dollars of joint venture interests sit outside the operating segments as a separate store of value. The yield is real, the contracts are real, and so is the sequence in which lenders get paid first.

Catalysts

The next dated event is a payment. The second-quarter distribution of $1.135 per common unit is payable August 10, 2026 to unitholders of record on August 3, 2026, an increase from the $1.125 declared for the prior quarter. Consecutive raises are the signal this structure exists to send, and the size of the next step is a cleaner read on management's confidence than any commentary.

The finance leadership changed on July 1, 2026, and the shape of the change is worth noticing. The boards of Delek US and of the general partner approved moving Mark Hobbs from Executive Vice President and Chief Financial Officer of the parent to Executive Vice President, Logistics, while Robert Wright became Chief Financial Officer of the parent and remained Chief Financial Officer of the partnership. Sending the parent's outgoing finance chief to run logistics puts senior attention on the segment that has been carrying the group's growth.

Operationally, the two things to watch are basin activity and the mix. Management has said it expects continued cash flow growth in the Delaware Basin during 2026 and points to a combined crude and water offering in the Midland Basin as the source of additional opportunities. At the same time, the reclassification of certain affiliate agreements into sales-type leases keeps moving fees out of the revenue line and into interest income, so year-over-year revenue comparisons will keep understating the underlying business until the change laps.

Peer Cohorts (Per Segment, With Filing Citations)

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

• WMB (WILLIAMS COMPANIES, INC.)
• FY2025 10-K: …volumes and the MVC for a stated period. Demand for gas gathering and processing services is dependent on producers' drilling activities, which is impacted by the strength of the economy, commodity prices, and the resulting demand for natural gas by manufacturing and industrial companies and consumers. Williams'…
• FY2025 10-K: …of necessary permits and opposition to hydrocarbon-based energy development; • Producer drilling activities impacting natural gas supplies supporting Williams' gathering and processing volumes; • Retaining and attracting customers by continuing to provide reliable services; • Revenue growth associated with additional…
• OKE (ONEOK INC /NEW/)
• FY2025 10-K: …areas in Canada and the United States via our interstate and intrastate natural gas pipelines, Northern Border and Matterhorn, which enables us to provide essential natural gas transportation and storage services. Growing demand from data centers and continued demand from local distribution companies,…
• FY2025 10-K: …revenues, as described below: Commodity Sales (all segments) - We contract to deliver residue natural gas, unfractionated NGLs and/or Purity NGLs, Refined Products, condensate and crude oil to customers at a specified delivery point. Our sales agreements may be daily or longer-term contracts for a specified volume.…
• KMI (KINDER MORGAN, INC.)
• FY2025 10-K: …that store fuels and offer blending services for ethanol and biodiesel. The transportation and storage volume levels are primarily driven by the demand for the refined petroleum products being shipped or stored. Demand for refined petroleum products tends to follow trends in population and economic growth, and, with…
• FY2025 10-K: …on estimated economic lives. This includes age, manufacturing specifications, technological advances, estimated production life of the oil or gas field served by the asset, contract terms for assets on leased or customer property, and historical data concerning useful lives of similar assets. Gains and losses • A…
• TRGP (TARGA RESOURCES CORP.)
• FY2025 10-K: …facility design and economies of scale. The Gathering and Processing segment's assets are located in the Permian Basin of West Texas and Southeast New Mexico (including the Midland, Central and Delaware Basins); the Eagle Ford Shale in South Texas; the Barnett Shale in North Texas; the Anadarko, Ardmore, and Arkoma…
• FY2025 10-K: …to market hubs and fractionation is expected to continue to grow. Continued demand for transportation, fractionation and export capacity is expected to lead to increased demand for other related fee-based services provided by our logistics and transportation assets as well as provide other growth opportunities. The…
• ET (ENERGY TRANSFER LP)
• FY2025 10-K: …industry consists of natural gas gathering, compression, treating, dehydration and processing, and is generally characterized by regional competition based on the proximity of gathering systems and processing plants to natural gas producing wells and the proximity of storage facilities to production areas and end-use…
• FY2025 10-K: …so the classification and regulation of our gathering facilities could be subject to change based on future determinations by the FERC, the courts and Congress. State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements and…
• EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
• FY2025 10-K: …Our natural gas transmission pipelines transport natural gas from regional processing facilities to downstream electric generation plants, local gas distribution companies, industrial and municipal customers, storage facilities or other connecting pipelines. The results of operations from our natural gas pipelines…
• FY2025 10-K: …companies. The crude oil business can be characterized by intense competition for supplies of crude oil at the wellhead. Competition is based primarily on quality of customer service, competitive pricing and proximity to customers and market hubs. Natural Gas Pipelines & Services In our natural gas gathering…
• PAA (PLAINS ALL AMERICAN PIPELINE LP)
• FY2025 10-K: …of gathering and transporting crude oil using pipelines (including gathering systems), trucks and, at times, on barges or railcars, in addition to providing terminalling, storage and other related services utilizing our integrated assets across the United States and Canada. Our assets provide services to third…
• FY2025 10-K: …or other major market hubs, such as the Houston market. Our crude oil terminals have significant flexibility and operational capabilities, including large-scale multi-grade handling and segregation capabilities and multiple marine transportation loading and unloading capabilities. Our largest crude oil terminals are…

Investments in Pipeline Joint Ventures (reported)

• MPLX (MPLX LP)
• FY2025 10-K: …into operation. If the vacatur of the easement results in a permanent shutdown of the pipeline, MPLX would have to contribute its 9.19 percent pro rata share of the cost to redeem the bonds (including the one percent redemption premium required pursuant to the indenture governing the notes) and any accrued and unpaid…
• FY2025 10-K: …interest in a joint venture ("Dakota Access") that owns and operates the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects (collectively, the "Bakken Pipeline system"). (2) Included within Other are certain equity method investments that have been deemed to be VIEs. The December 31, 2024 Natural…
• GEL (GENESIS ENERGY LP)
• FY2025 10-K: …price indexing, the Partnership's ability to transport volumes produced by its customers, and the contract period. The Partnership also constrains the estimates of variable consideration such that it is probable that a significant reversal of previously-recognized revenue will not occur throughout the life of the…
• FY2025 10-K: Gas Pipeline Partners, LP from 1992 to 1999, serving as the Chief Executive Officer and a director beginning in 1993 until he left to pursue personal interests, including investments. Leviathan (subsequently known as El Paso Energy Partners, L.P. and then GulfTerra Energy Partners, L.P.) was an NYSE listed MLP. Mr.…
• PAA (PLAINS ALL AMERICAN PIPELINE LP)
• FY2025 10-K: …These procedures also included, among others (i) reading the purchase agreements; (ii) testing management's process for developing the fair value estimate of the pipelines and equipment acquired; (iii) evaluating the appropriateness of the cost approach used by management; (iv) testing the completeness and accuracy…
• FY2025 10-K: …activities. At December 31, 2025 and 2024, we had outstanding letters of credit of approximately $95 million and $90 million, respectively. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements as defined by Item 303 of Regulation S-K. Investments in Unconsolidated Entities We have invested in…
• PAGP (PLAINS GP HOLDINGS LP)
• FY2025 10-K: …with FASB guidance with respect to the equity method of accounting for investments in common stock. An impairment of an equity investment results when factors indicate that the investment's fair value is less than its carrying value and the reduction in value is other than temporary in nature. F-30 Table of Contents…
• FY2025 10-K: I arrangements with long-term partners throughout the industry value chain spanning across multiple North American basins. We believe that these capital-efficient arrangements provide strategic alignment with long-term industry partners while adding volume commitments to our systems and improving returns. The…
• ENB (ENBRIDGE INC.)
• FY2025 10-K: …Alliance Pipeline, our interest in Aux Sable and our interest in NRGreen Power Limited Partnership (NRGreen) to Pembina Pipeline Corporation for $ 3.1 billion, including $ 327 million of non-recourse debt. A gain on disposal of $ 1.1 billion before tax, which is net of $ 1.0 billion of the goodwill from our Gas…
• FY2025 10-K: …VIEs during the years ended December 31, 2025 and 2024. For details on guarantee arrangements entered into with our VIEs refer to Note 31 - Guarantees . 138 13. LONG-TERM INVESTMENTS December 31, Ownership Interest 2025 2024 (millions of Canadian dollars) EQUITY INVESTMENTS Liquids Pipelines Cactus II Pipeline LLC…
• EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
• FY2025 10-K: PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Segment expenses represent operating costs and expenses exclusive of (i) depreciation, amortization and accretion expenses (excluding amortization of major maintenance costs for reaction-based plants and amortization of finance lease right-of-use assets), (ii)…
• FY2025 10-K: …II, Item 8 of this annual report. Comparison of Year Ended December 31, 2025 with Year Ended December 31, 2024 In total, investments in growth capital projects increased a net $503 million year-to-year primarily due to the following: • higher investments in our Bahia NGL Pipeline (placed into service in December…
• WES (Western Midstream Partners, LP)
• FY2025 10-K: …LLC ("TEG") 20.00 % White Cliffs Pipeline, LLC ("White Cliffs") 10.00 % _________________________________________________________________________________________ (1) The 25 % third - party interest in Chipeta Processing LLC ("Chipeta") is reflected within noncontrolling interests in the consolidated financial…
• FY2025 10-K: …Partnership closed on the sale of its 33.75 % interest in the Marcellus Interest systems for proceeds of $ 206.2 million, resulting in a net gain on sale of $ 63.9 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations. Mont Belvieu JV, Whitethorn LLC,…
• AM (ANTERO MIDSTREAM CORPORATION)
• FY2025 10-K: …issuance costs and debt premium. The Company used an income approach to estimate the selling price less costs to sell of the Utica Shale Property and Equipment, which represents fair value of the Utica Shale Property and Equipment as of December 31, 2025. The selling price less costs to sell is based on significant…
• FY2025 10-K: Joint Venture and Stonewall provide processing and fractionation services and high-pressure gas gathering services, respectively, in the Appalachian Basin. The water handling segment includes (i) two independent systems that deliver water from sources including the Ohio River, local reservoirs and several regional…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

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.