Delek US (DK)

What Moves the Stock

1. 01Gulf Coast 3-2-1 crack spreads: Differential between refined product prices and crude costs directly impacts refining margins
2. 02WTI-Midland to WTI-Cushing crude differentials: Wider discounts on Permian crude improve feedstock economics
3. 03Refinery utilization rates and turnaround schedules: Downtime for maintenance significantly impacts quarterly throughput volumes
4. 04Gasoline demand seasonality: Summer driving season (May-September) typically strengthens crack spreads and volumes
5. 05Inventory valuation impacts: LIFO/FIFO accounting creates earnings volatility during crude price swings
6. 06Refining operations (~75-80% of revenue): Processing crude oil into gasoline, diesel, jet fuel with margins driven by 3-2-1 crack spreads
7. 07Retail segment (~15-20%): Convenience store fuel and merchandise sales through company-operated and franchised locations
8. 08Logistics (~5%): Pipeline and terminal operations supporting refinery distribution

DK Chart

My Notes

• value/distressed - The stock attracts deep value investors betting on refining margin recovery and turnaround potential…
• Rising rates increase financing costs on the company's substantial debt load (Debt/Equity of 20.21), pressuring already negative cash flows.
• Watch on earnings: Gulf Coast 3-2-1 crack spread (gasoline and diesel premium to crude), WTI crude oil spot price and Permian Basin (WTI-Midland) differential to Cushing, US gasoline demand (EIA weekly product supplied data) and inventory levels.