Delek U.S. Holdings Inc. (DK, Financial) purchased 114,579 shares of its spun-off company, Delek Logistics Partners (DKL, Financial), for an average price of $30.71 per share between March 1 and March 29, according to SEC filings.
Headquartered in Brentwood, Tennessee, Delek Logistics owns and operates logistics and marketing assets for crude oil and intermediate and refined products.
The company gathers, transports and stores crude oil and markets, distributes, transports and stores refined products.
Delek Logistics Partners has a market cap of $797.98 million, an enterprise value of $1.19 billion, a price-earnings (P/E) ratio of 15.88, a price-sales (P/S) ratio of 1.76 and a quick ratio of 1.12.
In April 2012, Delek U.S. Holdings spun off Delek Logistics Partners.
Delek U.S. Holdings is also headquartered in Brentwood, Tennessee. It is an energy company engaged in petroleum refining, wholesale distribution of refined products and convenience store retailing. It operates through the Refining, Logistics and Retailing segments.
Delek U.S. Holdings has a market cap of $1.52 billion, an enterprise value of $1.86 billion, a P/B ratio of 1.53 and a P/S ratio of 0.33.
Delek U.S. owned 60% of Delek Logistics' limited partner units in 2012, but has since increased its ownership to 61%.
Today I spoke with Keith Johnson, the vice president of investor relations at Delek U.S. Holdings.
He told me the company invested in Delek Logistics for the following reasons:
- Delek U.S. felt Delek Logistics was an attractive allocation of capital and had good value.
- Delek U.S. believes Delek Logistics is undervalued.
According to GuruFocus, Delek Logistics Partners has a 4 of 10 financial strength rating with an interest coverage ratio of 11.75 and an equity-asset ratio of -0.03. Its Altman Z-Score of 2.67 indicates it is in some sort of financial distress and could potentially file for bankruptcy within the next two years. The company’s Beneish M-Score of -2.87 suggests it is a manipulator of its financial statements.
The company has a 5 of 10 profitability and growth rating. It has an operating margin of 17.33%, a net margin of 14.02%, a return on assets (ROA) of 16.15% and a three-year revenue growth rate of -21.20%.
Guru T. Boone Pickens (Trades, Portfolio) added to his stake in the company during the fourth quarter of 2016. Since then, the company’s market price has gained an estimated 25%.
The Peter Lynch chart below shows Delek Logistics Partners is trading slightly below its intrinsic value.
Disclosure: Author does not own any shares of this company.
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