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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 estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the upgrade, the most recent consensus for Delek US Holdings from its eight analysts is for revenues of US$9.1b in 2021 which, if met, would be a meaningful 15% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 64% to US$1.93. However, before this estimates update, the consensus had been expecting revenues of US$7.3b and US$2.14 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Despite these upgrades, the analysts have not made any major changes to their price target of US$25.80, implying that their latest estimates don't have a long term impact on what they think the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Delek US Holdings, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$17.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Delek US Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Delek US Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Delek US Holdings to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Delek US Holdings is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Delek US Holdings.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Delek US Holdings analysts - going out to 2023, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
This article by Simply Wall St is general in nature. 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.
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