Is DK's earnings volatility a red flag?

**Delek US Holdings (DK) exhibits high earnings volatility**, which can be a red flag for investors. Here's an analysis of the factors contributing to this volatility:

1. **Expected Earnings Decline**: Analysts anticipate a year-over-year decline in earnings and lower revenues for Delek US Holdings when it reports results for the quarter ended June 2024. This expectation of earnings decline can lead to volatility as investors react to the potential negative surprises.
2. **Recent Performance**: The stock's recent performance shows a weekly volatility of 8.2%, indicating that the stock price is subject to significant fluctuations. This volatility can be a concern for investors who prefer more stable investments.

|code|Ticker|Name|Date|Diluted EPS QoQ|Diluted EPS YoY|market_code|
|---|---|---|---|---|---|---|
|DK|DK.N|Delek Us Holdings|2024 Q1||-153.6842105263158|169|
|DK|DK.N|Delek Us Holdings|2024 Q2|-13.725490196078422|-346.15384615384613|169|
|DK|DK.N|Delek Us Holdings|2024 Q3|-106.89655172413795|-160.91370558375635|169|

3. **ExodusPoint Capital Management LP's Reduction in Position**: The investment firm ExodusPoint Capital Management LP reduced its position in Delek US Holdings by 44.4%. This strategic move could indicate a lack of confidence in the company's future performance, contributing to investor uncertainty and potentially affecting the stock's volatility.
4. **Market Sentiment and Ratings**: The consensus among analysts is a "Hold" rating with an average target price of $30.00. However, given the mixed ratings and target price increases and decreases, there is a level of uncertainty surrounding the stock's future performance, which can amplify earnings volatility.
5. **Historical Earnings Surprises**: Delek US Holdings has experienced significant earnings surprises in the past. For instance, the company reported an impressive $1.00 in earnings per share (EPS) in a quarter, surpassing market expectations by $0.26. However, it also reported a negative net margin of 0.31% and a decline of 28.8% in revenue from the previous year, indicating that while the company can exceed expectations, it also faces challenges that can lead to volatility.

In conclusion, Delek US Holdings' earnings volatility is a red flag due to the expected earnings decline, high weekly volatility, reduction in position by a significant investor, mixed market sentiment, and the company's history of earnings surprises. These factors combined can lead to uncertainty and potential risks for investors.