Stock of the Day

July 6, 2020

Valero Energy (VLO)

$134.67
-$4.47 (-3.2%)
Market Cap: $44.05B

About Valero Energy

Valero Energy Corporation manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, Mexico, Peru, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, heating oil, and asphalt; feedstocks; aromatics; sulfur and residual fuel oil; intermediate oils; and sulfur, sweet, and sour crude oils. It sells its refined products through wholesale rack and bulk markets; and through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company owns and operates renewable diesel and ethanol plants, as well as produces renewable diesel and naphtha under the Diamond Green Diesel brand name. In addition, it offers ethanol and various co-products, including dry distiller grains, syrup, and inedible distillers corn oil to animal feed customers. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.

Valero Energy Bull Case

Here are some ways that investors could benefit from investing in Valero Energy Co.:

  • Valero Energy Co. recently reported earnings per share of $0.64, significantly exceeding analysts' expectations of $0.14, indicating strong financial performance.
  • The current stock price is $135.49, reflecting a robust market position and potential for growth.
  • Valero Energy Co. has a dividend yield of 3.30%, providing investors with a steady income stream through its quarterly dividend of $1.13 per share.
  • Analysts have a consensus rating of "Moderate Buy" for Valero Energy Co., with a target price of $154.46, suggesting potential upside for investors.
  • The company has a relatively low debt-to-equity ratio of 0.35, indicating financial stability and lower risk compared to companies with higher leverage.

Valero Energy Bear Case

Investors should be bearish about investing in Valero Energy Co. for these reasons:

  • Valero Energy Co. has a beta of 1.42, suggesting that its stock is more volatile than the market, which could lead to higher risk for investors.
  • The company's price-to-earnings ratio of 16.16 may indicate that the stock is overvalued compared to its earnings, which could deter value-focused investors.
  • Recent price target reductions by analysts, such as from $160.00 to $159.00, may signal a lack of confidence in the stock's short-term performance.
  • Valero Energy Co. operates in a highly competitive oil and gas industry, which can be affected by fluctuating oil prices and regulatory changes, posing risks to profitability.
  • Despite a strong performance, the company's net margin of 2.13% suggests limited profitability, which could be a concern for investors seeking higher returns.

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