Yahoo Finance Behind Delek’s Stock Performance and Capex Plans
With Delek's 1Q16 Results Coming, Everyone Downstream Holds Breath
DK’s stock performance
Delek US Holdings’ (DK) stock continued its December 2015 downtrend with a weak beginning in 2016. However, since February 2016, amid volatility, DK’s stock rose by around 23%. During this period, refining cracks started strengthening, and the refining margin indicators of major refining companies also showed improvements.
During the same period, Western Refining (WNR) and HollyFrontier (HFC) rose by 4% and 18%, respectively. Valero Energy (VLO) gained by 6%. Notably, the Vanguard Energy ETF (VDE) has ~10% exposure to the refining sector.
DK’s capex position
Delek (DK) incurred capital expenditure, or capex, of around $218 million in 2015. DK raised its crude refining capacity by 15 Mbpd (thousand barrels per day) to 155 Mbpd in 2015. DK also completed turnarounds and the replacement of fluid catalytic units at both its Tyler and El Dorado refineries. Meanwhile, DK’s acquisition of a 48% interest in Alon USA Energy (ALJ) points toward company growth via acquisitions.
DK also aims to improve earnings from its Logistics and Retail segments. Delek has a retail network of 358 stores, which the company plans to expand further. In the Logistics segment, Delek (DK) had four third-party logistic acquisitions in 2015. Delek also took up two new crude oil pipeline projects to improve its crude sourcing flexibility.
With no major turnaround scheduled, DK expects its capex to decline through 2020, and the company expects to incur capex of around $89 million in 2016. This includes maintenance and regulatory spending—not growth-related capital expenditures.
In the final part, we’ll see what analysts are recommending for Delek.
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