Alon USA Energy (NYSE: ALJ) and Delek US Holdings (NYSE:DK) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Volatility and Risk

Alon USA Energy has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Delek US Holdings has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Alon USA Energy and Delek US Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alon USA Energy 0 3 1 0 2.25
Delek US Holdings 0 10 4 0 2.29

Alon USA Energy presently has a consensus target price of $11.38, suggesting a potential downside of 14.60%. Delek US Holdings has a consensus target price of $26.08, suggesting a potential upside of 4.00%. Given Delek US Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe Delek US Holdings is more favorable than Alon USA Energy.

Profitability

This table compares Alon USA Energy and Delek US Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alon USA Energy 0.89% 5.65% 1.96%
Delek US Holdings -3.15% -4.60% -1.80%

Earnings & Valuation

This table compares Alon USA Energy and Delek US Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Alon USA Energy N/A N/A N/A ($0.56) -23.79
Delek US Holdings $4.58 billion 0.34 $58.00 million ($2.32) -10.81

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

Insider and Institutional Ownership

49.5% of Alon USA Energy shares are owned by institutional investors. Comparatively, 97.0% of Delek US Holdings shares are owned by institutional investors. 8.8% of Alon USA Energy shares are owned by company insiders. Comparatively, 1.6% of Delek US Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Alon USA Energy pays an annual dividend of $0.60 per share and has a dividend yield of 4.5%. Delek US Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 2.4%. Alon USA Energy pays out -107.1% of its earnings in the form of a dividend. Delek US Holdings pays out -25.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Alon USA Energy has raised its dividend for 4 consecutive years. Alon USA Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Alon USA Energy beats Delek US Holdings on 8 of the 14 factors compared between the two stocks.

About Alon USA Energy

Alon USA Energy, Inc. is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. The Company’s segments include refining and marketing, asphalt and retail. Its refineries produce petroleum products, including various grades of gasoline, diesel, jet fuel, petrochemicals, petrochemical feedstocks, asphalt, and other petroleum-based products. As of December 31, 2016, it held interests in Alon USA Partners, LP, which owned a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day and an integrated wholesale marketing business. In addition, it owned a crude oil refinery in Krotz Springs, Louisiana, with a crude oil throughput capacity of approximately 74,000 barrels per day (bpd), as of December 31, 2016. The Company also owns crude oil refineries in California. As of December 31, 2016, it operated approximately 300 convenience stores.

About Delek US Holdings

Delek US Holdings, Inc. is a diversified downstream energy company. The Company has a broad platform consisting of refining, logistics, retail and wholesale marketing, renewables and asphalt operations. It operates through five segments: refining, logistics, asphalt, renewable and retail. Its refining assets consist of refineries operated in Tyler and Big Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a combined nameplate crude throughput capacity of 302,000 barrels per day. The Logistics segment gathers, transports and stores crude oil, as well as markets, distributes transports and stores refined production in the southeast United States and West Texas. Its asphalt operations consist of 14 owned or operated asphalt terminals serving markets from Tennessee to the west coast. Its Renewables segment consists of plants in Texas and Arkansas that produce biodiesel fuel. The Company’s convenience store retail business operates approximately 300 convenience stores.

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