Contrasting Western Refining (NYSE:WNR) and Delek US Holdings (DK)

Delek US Holdings (NYSE: DK) and Western Refining (NYSE:WNR) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitabiliy.

Earnings and Valuation

This table compares Delek US Holdings and Western Refining’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delek US Holdings $4.49 billion 0.37 $114.30 million ($1.82) -14.64
Western Refining N/A N/A N/A $1.52 23.80

Delek US Holdings has higher revenue and earnings than Western Refining. Delek US Holdings is trading at a lower price-to-earnings ratio than Western Refining, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Delek US Holdings and Western Refining’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delek US Holdings -2.37% -2.83% -1.11%
Western Refining 0.90% 2.76% 1.52%

Volatility & Risk

Delek US Holdings has a beta of 1.94, meaning that its share price is 94% more volatile than the S&P 500. Comparatively, Western Refining has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Delek US Holdings and Western Refining, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delek US Holdings 0 12 3 0 2.20
Western Refining 0 7 3 0 2.30

Delek US Holdings currently has a consensus price target of $22.29, indicating a potential downside of 16.34%. Western Refining has a consensus price target of $29.78, indicating a potential downside of 17.70%. Given Delek US Holdings’ higher possible upside, research analysts plainly believe Delek US Holdings is more favorable than Western Refining.

Institutional & Insider Ownership

96.8% of Delek US Holdings shares are held by institutional investors. Comparatively, 64.8% of Western Refining shares are held by institutional investors. 1.4% of Delek US Holdings shares are held by insiders. Comparatively, 26.5% of Western Refining shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Delek US Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. Western Refining pays an annual dividend of $1.52 per share and has a dividend yield of 4.2%. Delek US Holdings pays out -33.0% of its earnings in the form of a dividend. Western Refining pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delek US Holdings has raised its dividend for 4 consecutive years.

Summary

Western Refining beats Delek US Holdings on 7 of the 13 factors compared between the two stocks.

About Delek US Holdings

Delek US Holdings, Inc. is an integrated downstream energy business focused on petroleum refining and the transportation, storage and wholesale of crude oil, intermediate and refined products. The Company operates through two segments: Refining and Logistics. The Company’s refining segment operates independent refineries in Tyler, Texas (the Tyler refinery) and El Dorado, Arkansas (the El Dorado refinery). The Company’s logistics segment gathers, transports and stores crude oil and markets, distributes, transports and stores refined products in select regions of the southeastern United States and west Texas for both its refining segment and third parties. As of December 31, 2016, the Company’s refineries located in Tyler, Texas and El Dorado, Arkansas, represented a combined 155,000 barrels per day (bpd) of crude throughput capacity. Its refining system produces a range of petroleum-based products used in transportation and industrial markets.

About Western Refining

Western Refining, Inc. is an independent crude oil refiner and marketer of refined products. The Company operates through segments, including refining, Western Refining Logistics, LP (WNRL), retail and Other. As of December 31, 2016, the refining segment owned and operated three refineries that process crude oil and other feedstocks primarily into gasoline, diesel fuel, jet fuel and asphalt. The refining segment also sells refined products in the Mid-Atlantic region and Mexico. WNRL owns and operates terminal, storage, transportation and wholesale assets in the Southwest and terminal and storage assets in the Upper Great Plains region. The retail segment operates retail convenience stores and unmanned commercial fleet fueling (cardlock) locations located in the Southwest (Southwest Retail) and Upper Great Plains (SuperAmerica) regions. It markets refined products to a customer base, including wholesale distributors and retail chains.

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