Better Buy: Calumet Specialty Products Partners LP vs. Delek US Holdings, Inc.

While Calumet Specialty Products Partners (NASDAQ: CLMT) and Delek US Holdings (NYSE: DK) both focus on the downstream segment of the oil market and operate refineries, that's where their similarities end. Calumet so different is a master limited partnership (MLP) that makes most of its money manufacturing specialty petroleum products. Delek, on the other hand, operates a diverse set of refining and logistics assets. It controls not one, but two MLPs: Alon USA Partners (NYSE: ALDW) and Delek Logistics Partners (NYSE: DKL). While those differences are important for investors to consider, one factor sets Delek so far apart from Calumet that it's the clear better buy between the two.

While Calumet Specialty Products Partners' chosen corporate structure is an MLP, it's quite different from others in the space. Instead of owning pipelines and storage terminals, as do Alon USA Partners and Delek Logistics Partners, that generate relatively predictable cash flow from fee-based contracts, Calumet operates refineries and specialty product manufacturing facilities. So its earnings can fluctuate wildly due to its direct exposure to commodity prices. This volatility has proven problematic over the past year, for example, during which its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) has swung between $92.9 million and $261.9 million per quarter.

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Source: Fool.com