Delek US Holdings, Inc. (NYSE:DK) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company’s business prospects. Delek US Holdings has also found favour with investors, with the stock up a notable 15% to US$27.80 over the past week. It will be interesting to see if today’s upgrade is enough to propel the stock even higher.
After the upgrade, the ten analysts covering Delek US Holdings are now predicting revenues of US$15b in 2022. If met, this would reflect a meaningful 15% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$3.76 per share this year. Before this latest update, the analysts had been forecasting revenues of US$13b and earnings per share (EPS) of US$1.81 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Delek US Holdings 9.1% to US$26.57 on the back of these upgrades. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Delek US Holdings at US$37.00 per share, while the most bearish prices it at US$8.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Delek US Holdings’ growth to accelerate, with the forecast 21% annualised growth to the end of 2022 ranking favourably alongside historical growth of 8.3% 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 2.8% 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 biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Delek US Holdings.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Delek US Holdings going out to 2024, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.