NEW YORK (TheStreet) -- Delek US Holdings (DK - Get Report) stock is lower Thursday after pricing its secondary offering of 9.2 million shares of common stock. The stock, offered by selling stockholder Delek Hungary Holdings, will be sold at $30 a share. Additionally, the underwriters have been granted a 30-day option to purchase up to an additional 1.38 million shares of common stock.
By late morning, shares had fallen 4.2% to $29.81.
The offering is expected to close around May 20, subject to customary closing conditions. Barclays, Bank of America, Wells Fargo, Goldman Sachs and RBC Capital Markets are acting as joint book-running managers for the offering.
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TheStreet Ratings team rates DELEK US HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DELEK US HOLDINGS INC (DK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DK's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
- DELEK US HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DELEK US HOLDINGS INC reported lower earnings of $1.95 versus $4.58 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $1.95).
- DK, with its decline in revenue, underperformed when compared the industry average of 3.1%. Since the same quarter one year prior, revenues fell by 19.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of DELEK US HOLDINGS INC has not done very well: it is down 17.09% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 56.5% when compared to the same quarter one year ago, falling from $77.50 million to $33.70 million.
- You can view the full analysis from the report here: DK Ratings Report