What Just Happened With Delek Logistics Partners Stock?

Delek Logistics Partners (DKL) has drawn attention after its recent trading performance, with the stock up about 9% over the past month and roughly 12% over the past 3 months.

For investors watching income focused energy infrastructure stocks, DKL's move comes against a backdrop of reported annual revenue of US$1,060.9 million and net income of US$169.8 million, alongside a current market value near US$2.9b.

At a share price of US$54.88, Delek Logistics Partners has seen its 30 day share price return of 8.87% and 90 day share price return of 11.52% contrast with a slight pullback over the past week, while a 1 year total shareholder return of 36.19% and 5 year total shareholder return of 109.94% point to sustained interest in the income and infrastructure story rather than a short lived trade.

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Bulls point to Delek Logistics Partners' income profile and recent price momentum, while bears focus on its valuation score and rich recent returns. Which side do the current numbers lean toward as you weigh what the units are worth?

Most Popular Narrative: 70% Undervalued

Compared with the last close of $54.88, the most followed narrative on Delek Logistics Partners points to a fair value of $55.25, built on detailed revenue, margin and discount rate assumptions.

Expanding footprint through the integration of recent water gathering acquisitions (H2O and Gravity) enables operational scale and efficiency gains along key oil and refined product corridors, which should translate to improved net margins and higher distributable cash flow.

Curious what sits behind that confidence in higher cash flows and a richer multiple for Delek Logistics Partners? The narrative leans on specific growth rates for revenue, a step up in margins, and a valuation framework that prices the business more like a premium operator rather than a typical pipeline partnership. The exact mix of those inputs is what drives the projected upside and is where the story really gets interesting.

Result: Fair Value of $55.25 (UNDERVALUED)

However, Delek Logistics Partners still faces key risks, including high leverage tied to recent high yield funding and exposure to any pullback in Permian customer volumes.

Another View on Delek Logistics Partners Valuation

The Simply Wall St DCF model presents a very different perspective on Delek Logistics Partners, with an estimate of future cash flow value around $263.17 per unit compared with the current $54.88 price. This implies that the units screen as heavily undervalued. If the multiples suggest the units are expensive, but the cash flows suggest they are cheap, which lens do you rely on more?

Next Steps

Given the mixed signals around Delek Logistics Partners, now is a good time to review the data yourself, decide what matters most, and then weigh both the potential upsides and the concerns by checking out 3 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Delek Logistics Partners?

If Delek Logistics Partners has you rethinking your watchlist, this is the moment to widen your search and spot other opportunities before they move without you.

• Target potential mispricings by scanning 48 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect their current profiles.
• Strengthen the income side of your portfolio by reviewing 8 dividend fortresses built around higher yielding companies with established payout records.
• Dial down portfolio stress by focusing on 81 resilient stocks with low risk scores that score well on financial resilience and business stability.

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.