DK

We rate Delek US Holdings, Inc. (DK) as a Hold with a composite score of 55.8/100 at a current price of $34.01. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (74th percentile) and quality (63th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (14/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Delek US Holdings, Inc. holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 55.8/100 places it at rank #1170 in our full 7,333-stock universe. At $1.9B in market capitalization, Delek US Holdings, Inc. is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -13% combined with momentum at the 45th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 3% (-40.0pp vs sector) narrow to operating margins of 0% (-12.2pp vs sector) and net margins of -1.2%, yielding a gross-to-net conversion rate of -38%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $34.01, Delek US Holdings, Inc. appears undervalued relative to its fundamentals. Our value factor score of 74/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 11.2x (roughly in line with the sector median of 13.7x), EV/EBITDA of 136.5x (at a premium), P/B of 4.6x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Very High uncertainty rating to Delek US Holdings, Inc.. The stock exhibits multiple compounding risk factors: significant leverage (714% debt-to-equity), current negative profitability (net margin -1.2%), the combination of leverage (714% D/E) and thin margins (-1.2% net) amplifies downside risk. The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: significant leverage (714% debt-to-equity); current negative profitability (net margin -1.2%); the combination of leverage (714% D/E) and thin margins (-1.2% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 43th percentile and quality factor at the 63th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: a 3.16% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Delek US Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-27.3%), elevated leverage (714% D/E), negative profitability, weak asset returns (ROA -1.7%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Delek US Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Delek US Holdings, Inc. receives a Hold rating with a composite score of 55.8/100 (rank #1170 of 7,333). Our quantitative framework assigns a No Moat (14/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 53/100.

Our analysis supports a neutral stance on Delek US Holdings, Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.