Delek US Holdings, Inc. (DK): A Bull Case Theory

We came across a bullish thesis on Delek US Holdings on Substack by Matt Lindsay. In this article, we will summarize the bulls’ thesis on DK. Delek US Holdings, Inc. (DK)’s share was trading at $19.66 as of 22^nd May. DK’s trailing and forward P/E were 4.61 and 20.33 respectively according to Yahoo Finance.

Delek US Holdings presents a compelling investment opportunity for those seeking exposure to the energy sector’s evolving landscape. Despite reporting a net loss of $172.7 million in Q1 2025, the company is actively implementing strategic initiatives aimed at enhancing long-term profitability and shareholder value. Central to this strategy is the Enterprise Optimization Plan (EOP), projected to deliver at least $120 million in run-rate cash flow improvements in the second half of 2025.

Delek’s focus on refining its operational structure is evident in its midstream deconsolidation efforts. The acquisition of Gravity Water Midstream by Delek Logistics Partners (DKL) reduced Delek’s ownership in DKL to 63.4%, enhancing financial flexibility and increasing third-party EBITDA contributions to approximately 80% on a pro-forma basis.

The company’s commitment to returning value to shareholders is underscored by its recent repurchase of approximately $32 million in common stock and the declaration of a regular quarterly dividend of $0.255 per share.

While the refining segment faced challenges due to a 29.8% decline in benchmark crack spreads compared to the prior year, the logistics segment demonstrated resilience, with Adjusted EBITDA increasing to $116.5 million in Q1 2025 from $99.7 million in the same quarter last year.

Delek’s current valuation may not fully reflect the potential benefits of its strategic initiatives and operational optimizations. For investors with a long-term perspective, Delek US Holdings offers a balanced approach to growth and value in the energy sector.

Delek US Holdings, Inc. (DK) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held DKL at the end of the fourth quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of DK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.