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Delek Logistics Partners (DKL)
NYSE:DKL
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Delek Logistics
(NYSE:DKL)
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Rating:69Neutral
Price Target:
$57.00
▲(6.50% Upside)
Action:DowngradedDate:03/02/26
The score is held back primarily by elevated balance-sheet risk and weakened TTM free cash flow despite strong profitability. Offsetting factors include a constructive technical trend, attractive income valuation (high dividend yield with a moderate P/E), and an earnings call that emphasized record results, reiterated 2026 guidance, and strong liquidity, tempered by execution timing risks around the sour gas ramp.
Positive Factors
Strong profitability & margins
Sustained high EBITDA and net margins indicate durable operating leverage and efficient asset utilization in midstream activities. These margins help the company absorb volume cyclicality, support distributions and reinvestment, and underpin longer-term earnings resilience across market cycles.
Record EBITDA and raised guidance
A record quarter and upgraded full-year EBITDA guidance reflect structural operational improvements and successful capacity additions. Upward guidance signals management execution and better cash-earning capacity that can fund growth projects, stabilize distributions, and improve credit metrics over the medium term.
Asset expansion & commissioning
Commissioning Libby 2 and water midstream acquisitions expand sour gas handling and water gathering capabilities, diversifying revenue streams and strengthening franchise assets. These durable operational upgrades raise barriers to entry and deepen customer ties in the Delaware Basin and other core regions.
Negative Factors
Weak, volatile balance sheet
A stretched capital structure with past negative equity and limited equity cushion increases refinancing and covenant risk. Volatile leverage undermines balance-sheet flexibility for large capex or downturns, raising the probability that future financing costs or asset sales may be needed to stabilize capital metrics.
Weak free cash flow conversion
Despite positive operating cash flow, near-zero free cash flow indicates heavy growth capex or poor OCF-to-FCF conversion. This limits the company's ability to pay down debt, self-fund acquisitions, or sustainably increase distributions without relying on external financing or credit availability.
Segment weakness & choppy revenue trends
Declines in key segments and historically choppy revenue growth reduce visibility into recurring cash flows. Segment-specific weakness heightens execution risk as cyclical volumes shift, making earnings and margin sustainability more vulnerable to commodity and contract dynamics over the medium term.
Delek Logistics (DKL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.85B
Dividend Yield9.78%
Average Volume (3M)67.68K
Price to Earnings (P/E)13.5
Beta (1Y)0.34
Revenue Growth-1.78%
EPS Growth9.32%
CountryUS
EmployeesN/A
SectorEnergy
Sector Strength52
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)0.88
Shares Outstanding53,512,344
10 Day Avg. Volume78,603
30 Day Avg. Volume67,684
Financial Highlights & Ratios
PEG Ratio1.30
Price to Book (P/B)390.45
Price to Sales (P/S)2.36
P/FCF Ratio-77.90
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue2.83
Enterprise Value/Gross Profit13.53
Enterprise Value/Ebitda5.96
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)4.45
Revenue Forecast (FY)$1.14B
Delek Logistics Business Overview & Revenue Model
Company DescriptionDelek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the United States. It operates through three segments: Pipelines and Transportation, Wholesale Marketing and Terminalling, and Investment in Pipeline Joint Ventures. The Pipelines and Transportation segment includes pipelines, trucks, and ancillary assets that provide crude oil gathering, crude oil intermediate and refined products transportation, and storage services primarily in support of the Tyler, El Dorado, and Big Spring refineries, as well as offers crude oil and other products transportation services to third parties. This segment operates approximately 400 miles of crude oil transportation pipelines; 450 miles of refined product pipelines; and approximately 900 miles of crude oil gathering, and intermediate and refined products storage tanks with an aggregate of approximately 10.2 million barrels of active shell capacity. The Wholesale Marketing and Terminalling segment provides wholesale marketing, transporting, storage, and terminalling services related to refined products to independent third parties. The Investments in Pipeline Joint Ventures Segment owns a portion of three joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which serves third parties and subsidiaries. Delek Logistics GP, LLC serves as the general partner of the company. Delek Logistics Partners, LP was incorporated in 2012 and is headquartered in Brentwood, Tennessee. Delek Logistics Partners, LP operates as a subsidiary of Delek US Holdings, Inc.
How the Company Makes MoneyDelek Logistics generates revenue primarily through the transportation and storage of crude oil and refined petroleum products. This includes fees collected from customers for the use of its pipeline and storage facilities. The company operates on a fee-based model, which provides stable cash flows, especially with long-term contracts in place. Key revenue streams include transportation tariffs, storage fees, and ancillary services related to logistics management. Additionally, partnerships with refining and marketing entities, particularly its relationship with Delek US Holdings, play a crucial role in securing consistent business and optimizing operational efficiencies, ultimately contributing to its earnings.
Delek Logistics Earnings Call Summary
Earnings Call Date:Feb 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presented multiple strong positives: record 2025 adjusted EBITDA ($536M), a record Q4 ($142M, +24.6% YoY), successful acquisitions and integration of H2O and Gravity, Libby 2 commissioning (160MM scf/day), strong segment gains (notably Storage & Transportation and Pipeline JV), solid liquidity (~$940M) and an increase in distributions. Key risks and negatives centered on a slower-than-expected sour gas ramp, dependence on completion of AGI and sour infrastructure to realize projected EBITDA gains, a flat Wholesale segment, and a guidance range that reflects sensitivity to execution timing. Overall, the highlights and financial achievements materially outweigh the operational timing risks described.Q4-2025 Updates
Positive Updates
Record Annual Adjusted EBITDA
Delek Logistics achieved a record adjusted EBITDA of $536 million for 2025, driven by strong execution and the contributions from the acquisitions of H2O and Gravity.
Quarterly EBITDA Growth and Record Q4
Q4 adjusted EBITDA was approximately $142 million, up from $114 million in Q4 2024 (≈+24.6%) and $6 million higher than the prior quarter, marking a new quarterly record.
Strong Segment Performance
Gathering & Processing: $71M in Q4 vs $66M prior year (≈+7.6%); Storage & Transportation: $35M vs $18M prior year (≈+94.4%); Investments in Pipeline JV: $26M vs $18M prior year (≈+44.4%); Wholesale Marketing & Terminalling: $21M (flat YoY, 0%).
Libby 2 Plant Commissioned — Processing Capacity Expanded
Commissioned the Libby 2 processing plant, increasing Complex capacity to ~160 million scf/day and enabling planned sour gas handling and AGI capabilities to support long-term Delaware Basin growth.
Water Business Integration and Expanded Offering
Integration of H2O and Gravity largely completed, creating a combined crude, gas and water platform in the Permian that strengthens the competitive position and supports additional growth opportunities.
Strong Liquidity and Capital Deployment
Ended 2025 with approximately $940 million available liquidity under credit facilities. Q4 capital spending was ~$32 million (with ~$26 million in growth capital, primarily for initiating sour gas capabilities).
Unitholder Returns — Distribution Increase
Board approved a 52nd consecutive quarterly distribution increase, raising the distribution to $1.125 per unit, marking 13 consecutive years of distribution growth.
Increased Third‑Party Revenue / Economic Separation
Management expects ~80% of run‑rate EBITDA in 2026 to come from third parties; related intercompany transactions increased the partnership's third‑party EBITDA to ~82%, supporting greater independence from the sponsor.
Negative Updates
Sour Gas Ramp Slower Than Initial Expectations
Ramp-up of sour gas processing and utilization has been slower than originally anticipated. Full utilization and the associated EBITDA uplift are contingent on completion of the AGI well and sour gas gathering infrastructure, creating timing uncertainty.
Guidance Range Reflects Execution Sensitivity
2026 full‑year EBITDA guidance of $520 million to $560 million spans potential outcomes around the 2025 record of $536 million, indicating sensitivity of results to G&P performance and the timing of sour gas ramp and other execution milestones.
Wholesale Segment Stagnation
Wholesale Marketing & Terminalling adjusted EBITDA remained flat at $21 million year-over-year, indicating no growth in that segment for the quarter.
Dependence on Near-Term Project Completion
Near-term value realization and step-change utilization depend heavily on completing projects (AGI, sour gathering/compression); delays or slower-than-expected ramp could materially affect expected incremental EBITDA.
Company Guidance
The company reiterated full-year 2026 adjusted EBITDA guidance of $520 million to $560 million, following a record 2025 adjusted EBITDA of $536 million and a record Q4 2025 adjusted EBITDA of approximately $142 million (up from $114 million a year ago and $6 million above the Q3 record); Q4 distributable cash flow as adjusted was $73 million with a DCF coverage ratio as adjusted of ~1.22x. Management noted the Libby Complex capacity is now ~160 million scf/day, Q4 capital expenditures were about $32 million (including ~$26 million of growth capex toward sour gas capabilities), available liquidity under credit facilities of roughly $940 million, and that roughly 80% of run‑rate EBITDA is expected to come from third parties in 2026 (post-transaction third‑party EBITDA now ~82%); segment metrics in Q4 included G&P EBITDA of $71 million (vs. $66M), Wholesale Marketing & Terminalling $21 million (flat), Storage & Transportation $35 million (vs. $18M), and Investments in Pipeline JV $26 million (vs. $18M).Delek Logistics Financial Statement Overview
Summary
Profitability is strong (TTM net margin ~17%, EBITDA margin ~46%) and TTM revenue growth improved (+4.7%), but balance-sheet risk is elevated (multi-year negative/very thin equity and unstable leverage signals). Operating cash flow is solid, yet TTM free cash flow fell to roughly breakeven/negative, reducing flexibility for de-risking and distributions.Income Statement
DKL shows solid profitability with healthy margins, including TTM (Trailing-Twelve-Months) net profit margin around 17% and strong EBITDA margin (~46%). Revenue growth has re-accelerated in TTM (+4.7%) after declines in 2023–2024, suggesting improving momentum. Offsetting this, gross margin has trended down from earlier years and the revenue trajectory has been choppy, which reduces visibility despite strong current earnings power.78
Positive
Balance Sheet
Balance sheet quality appears pressured and volatile. Several years show negative equity (2020–2023), and even in 2024–TTM equity remains very small relative to the asset base, implying limited balance-sheet cushion. Leverage signals are inconsistent across periods (including extremely high debt-to-equity in 2024), which elevates financial risk and makes the capital structure look unstable despite improved equity in TTM.36
Negative
Cash Flow
Operating cash flow is consistently positive and has improved in TTM (about $244M vs. ~$206M in 2024), supporting earnings quality. However, free cash flow deteriorated sharply to roughly breakeven/negative in TTM (about -$0.4M) after being meaningfully positive in prior years, indicating heavier capital spending or weaker conversion to discretionary cash. Cash generation is therefore adequate at the operating level but currently less supportive for debt reduction or distributions.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.01B | 940.64M | 1.02B | 1.04B | 700.90M |
| Gross Profit | 211.67M | 243.75M | 279.72M | 246.62M | 214.24M |
| EBITDA | 484.43M | 394.70M | 370.28M | 311.94M | 265.18M |
| Net Income | 176.46M | 142.69M | 126.24M | 159.05M | 164.82M |
Balance Sheet | |||||
| Total Assets | 2.78B | 2.04B | 1.64B | 1.68B | 935.07M |
| Cash, Cash Equivalents and Short-Term Investments | 10.89M | 5.38M | 3.75M | 7.97M | 4.29M |
| Total Debt | 35.18M | 1.89B | 1.72B | 1.68B | 919.85M |
| Total Liabilities | 2.77B | 2.01B | 1.80B | 1.79B | 1.04B |
| Stockholders Equity | 6.11M | 35.53M | -161.87M | -110.70M | -103.99M |
Cash Flow | |||||
| Free Cash Flow | -30.64M | 74.55M | 124.97M | 45.47M | 251.15M |
| Operating Cash Flow | 237.12M | 206.34M | 225.32M | 192.17M | 275.16M |
| Investing Cash Flow | -444.20M | -384.58M | -89.63M | -770.44M | -16.36M |
| Financing Cash Flow | 212.59M | 179.87M | -139.91M | 581.95M | -258.75M |
Delek Logistics Technical Analysis
Positive
53.52
Price Trends
50.10
Positive
46.93
Positive
44.12
Positive
Market Momentum
0.65
Positive
54.53
Neutral
54.17
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DKL, the sentiment is Positive. The current price of 53.52 is above the 20-day moving average (MA) of 53.43, above the 50-day MA of 50.10, and above the 200-day MA of 44.12, indicating a neutral trend. The MACD of 0.65 indicates Positive momentum. The RSI at 54.53 is Neutral, neither overbought nor oversold. The STOCH value of 54.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DKL.
Delek Logistics Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $15.20B | 8.81 | 14.75% | 8.54% | -7.53% | 9.74% | |
73 Outperform | $8.17B | 11.96 | 59.38% | 8.45% | 10.78% | 19.10% | |
71 Outperform | $30.84B | 8.67 | 122.75% | 6.07% | 15.43% | 0.43% | |
69 Neutral | $2.85B | 13.53 | 847.51% | 9.78% | -1.78% | 9.32% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
62 Neutral | $15.66B | -80.97 | -1.79% | 6.08% | 38.38% | 3.35% | |
47 Neutral | $591.77M | 11.33 | -2.47% | ― | 17.09% | 72.64% |
* Energy Sector Average
DKL
Delek Logistics
53.20
16.16
43.64%
CQP
Cheniere Energy Partners
63.71
5.14
8.77%
PAA
Plains All American
21.55
3.89
22.01%
SMC
Summit Midstream
31.50
-5.32
-14.45%
VNOM
Viper Energy
43.81
4.55
11.58%
HESM
Hess Midstream Partners
39.35
1.83
4.88%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.