Is Delek Logistics Partners LP overvalued or undervalued?

As of 25 February 2025, the valuation grade for Delek Logistics Partners LP has moved from risky to very attractive, indicating a significant improvement in its perceived value. The company appears undervalued, especially when considering its P/E ratio of 14, which is lower than peers like Western Midstream Partners LP at 11.04 and Plains All American Pipeline LP at 9.78. Additionally, Delek's EV to EBITDA ratio stands at 15.04, which is favorable compared to the industry average, further supporting the undervaluation thesis.
In terms of performance, Delek Logistics has shown mixed returns, with a 1-week return of 3.01% compared to the S&P 500's 1.05%, but a disappointing 3-year return of -18.19% against the S&P's 70.41%. The company's strong ROE of 161.48% and ROCE of 8.59% also highlight its efficiency and profitability relative to its peers. Overall, the combination of attractive valuation ratios and performance metrics suggests that Delek Logistics Partners LP is indeed undervalued in the current market context.