William Blair & Co. has reiterated its “Outperform” and “aggressive growth” recommendation for Delek Group Ltd. (TASE: DLEKG) subsidiary Delek US Holdings Inc. (NYSE:DK) following the publication of the company’s financial reports for the fourth quarter of 2006 and the year as a whole.
William Blair said, “Fourth quarter earnings per share (EPS) of $0.22 exceeded our $0.20 estimate and the $0.21 consensus estimate. earnings before interest, taxes, depreciation and amortization (EBITDA) of $28 million exceeded our $24 million forecast, primarily due to higher energy marketing profitability, as well as slightly better-than-expected profitability at both the refining and retail divisions.”
In addition, “Thus far in Delek’s first quarter of 2007, refining industry crack spreads appear to be tracking in line with the year-ago level, and we estimate Delek’s refining margins should remain solidly above the industry benchmark. Also, we estimate gasoline gross margins quarter-to-date are in line with the historical first-quarter margin average.
“We are raising our 2007 EPS estimate by $0.15 to $1.90 primarily to reflect the aforementioned tax credits. For 2008, we are introducing an EPS estimate of $2.10, which represents growth of 11%. We reiterate our Outperform rating on Delek US as we believe this quarter provides reaffirmation the company is not just the beneficiary of timely acquisitions, but also a solid operator of assets as well. Furthermore, shares appear to be significantly undervalued. Based on our sum-of-the parts analysis, using EV/EBITDA multiples of publicly traded energy retail and refining peers, we estimate 33% stock price upside to fair value from current levels.”
Published by Globes [online], Israel business news - www.globes.co.il - on March 11, 2007
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