Should Value Investors Buy Delek US Holdings (DK) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Delek US Holdings (DK). DK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also note that DK holds a PEG ratio of 0.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DK's industry currently sports an average PEG of 0.66. Over the last 12 months, DK's PEG has been as high as 0.48 and as low as 0.22, with a median of 0.30.
Another notable valuation metric for DK is its P/B ratio of 1.59. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.90. Over the past year, DK's P/B has been as high as 3.12 and as low as 1.11, with a median of 1.44.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DK has a P/S ratio of 0.13. This compares to its industry's average P/S of 0.32.
Finally, investors should note that DK has a P/CF ratio of 3.85. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. DK's current P/CF looks attractive when compared to its industry's average P/CF of 4.67. Within the past 12 months, DK's P/CF has been as high as 126.69 and as low as 2.81, with a median of 17.41.
Another great Oil and Gas - Refining and Marketing stock you could consider is Phillips 66 (PSX), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Phillips 66 currently holds a Forward P/E ratio of 7.42, and its PEG ratio is 0.60. In comparison, its industry sports average P/E and PEG ratios of 5.21 and 0.66.
PSX's Forward P/E has been as high as 19.08 and as low as 5.86, with a median of 10.43. During the same time period, its PEG ratio has been as high as 2.40, as low as 0.48, with a median of 0.65.
Phillips 66 also has a P/B ratio of 1.81 compared to its industry's price-to-book ratio of 1.90. Over the past year, its P/B ratio has been as high as 2.40, as low as 1.45, with a median of 1.72.
These are only a few of the key metrics included in Delek US Holdings and Phillips 66 strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, DK and PSX look like an impressive value stock at the moment.
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