Celebrations may be in order for Delek US Holdings, Inc. (NYSE:DK) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 17% to US$28.40 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After the upgrade, the eight analysts covering Delek US Holdings are now predicting revenues of US$19b in 2022. If met, this would reflect a notable 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 110% to US$8.63. Prior to this update, the analysts had been forecasting revenues of US$17b and earnings per share (EPS) of US$8.04 in 2022. Sentiment certainly seems to have improved in recent times, with a substantial gain in revenue and a small lift in earnings per share estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$31.92, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Delek US Holdings, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$23.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Delek US Holdings' past performance and to peers in the same industry. The analysts are definitely expecting Delek US Holdings' growth to accelerate, with the forecast 31% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 6.0% per year. So it's clear with the acceleration in growth, Delek US Holdings is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Delek US Holdings.
Analysts are clearly in love with Delek US Holdings at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .
We also provide an overview of the Delek US Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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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