Delek Logistics Partners (DKL) Faces A Valuation Test On Its Water Gathering Growth Story
Recent Performance Context For Delek Logistics Partners Stock
Delek Logistics Partners (DKL) has drawn investor attention after a mixed stretch in recent months, with the stock edging higher over the past 3 years while showing some shorter term fluctuations.
At a latest share price of $55.70, Delek Logistics Partners has delivered an 18.51% year-to-date share price return. Its 1-year total shareholder return of 40.51% and 3-year total shareholder return of 80.76% point to momentum that has been building rather than fading.
Scan beyond Delek Logistics Partners and compare its recent momentum with a curated set of income focused infrastructure plays in the 11 dividend fortresses.
For Delek Logistics Partners, that strong recent run and solid reported revenue and net income growth could point to a business story as much as sentiment. How far does the current price already reflect that?
Most Popular Narrative: 5.1% Overvalued
The most followed narrative places Delek Logistics Partners’ fair value at $53.00, slightly below the recent $55.70 close, which frames the current premium investors are paying.
Expanding footprint through the integration of recent water gathering acquisitions (H2O and Gravity) enables operational scale and efficiency gains along key oil and refined product corridors, which should translate to improved net margins and higher distributable cash flow.
Want to see what underpins that fair value call? The narrative leans heavily on future earnings power, margin expansion and a richer profit multiple than many peers. The full breakdown shows exactly how those moving parts are expected to line up.
Result: Fair Value of $53.00 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the narrative around Delek Logistics Partners still hinges on the effective use of recent high capital spending and on managing leverage if fossil fuel demand weakens faster than expected.
Find out about the key risks to this Delek Logistics Partners narrative.
Another View On Delek Logistics Partners Valuation
The analyst narrative frames Delek Logistics Partners as about 5.1% overvalued relative to a $53.00 fair value, using future earnings and a 15.2x P/E as anchors. Our SWS DCF model points in the opposite direction, with a fair value estimate of $212.88 and the stock trading at $55.70, which suggests a large implied discount. Which set of assumptions do you find more reasonable?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Delek Logistics Partners for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
The mixed signals around Delek Logistics Partners can feel tricky, so it helps to look at the full risk and reward picture yourself and act while the data is fresh. To see both sides in one place, review the 2 key rewards and 3 important warning signs
Looking For More Investment Ideas Beyond Delek Logistics Partners?
If Delek Logistics Partners has sharpened your focus on opportunity and risk, do not stop here. Use the Simply Wall Street Screener to pressure test fresh ideas.
- Target steady potential by scanning income ideas with stronger balance sheets through the 11 dividend fortresses.
- Hunt for quality at a reasonable price by checking companies flagged in the 47 high quality undervalued stocks.
- Reduce unwanted surprises by focusing on companies in the 81 resilient stocks with low risk scores.
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.
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