Delek (DK) Stock Falling on Lower Oil Prices
NEW YORK (TheStreet) -- Delek U.S. Holdings (DK) - Get Report stock is falling 0.23% to $25.88 in early afternoon trading on Tuesday, as oil prices sink and affect stocks in the energy sector.
Oil prices are reversing their earlier gains as the market's attention is shifted back to concerns about the oversupply of oil, Reuters reports.
"Yesterday's rally was a reaction to the likely increase in geopolitical risk despite the fact Syria itself is not big oil producer," Pete Donovan, broker at LiquidityEnergy, told Reuters. "But as emphasis returns to the oversupply in oil, the market is giving back those gains."
Crude oil (WTI) is down by 2.49% to $40.70 per barrel and Brent crude is down by 1.86% to $43.73 per barrel in early afternoon trading, according to the CNBC.com index.
Based in Brentwood, TN, the company is an integrated energy business that focuses on petroleum refining and the transportation, storage and wholesale of crude oil. Delek's 2015 third quarter earnings results reported on November 3 missed analysts' expectations.
Separately, TheStreet Ratings team rates DELEK US HOLDINGS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate DELEK US HOLDINGS INC (DK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 91.32% to $99.30 million when compared to the same quarter last year. In addition, DELEK US HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -26.28%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 33.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for DELEK US HOLDINGS INC is currently extremely low, coming in at 3.73%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 1.20% is above that of the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DELEK US HOLDINGS INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: DK
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.