Now trading at a price of $126.18, Valero Energy has moved 1.3% so far today.
The stock outperformed the S&P 500 index by 308.0%. More recently, the company's 50-day average price was $114.11. Valero Energy Corporation manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, and internationally. Based in San Antonio, TX, the large-cap Energy company has 9,716 full time employees. Valero Energy has offered a 3.2% dividend yield over the last 12 months.
The Business Has Weak Operating Margins:
| 2020-02-26 | 2021-02-23 | 2022-02-22 | 2023-02-23 | |
|---|---|---|---|---|
| Revenue (MM) | $108,324 | $64,912 | $113,977 | $176,383 |
| Gross Margins | 4.4% | -1.1% | 2.8% | 9.5% |
| Operating Margins | 3.5% | -2.4% | 1.9% | 8.9% |
| Net Margins | 2.24% | -2.19% | 0.82% | 6.54% |
| Net Income (MM) | $2,422 | -$1,421 | $930 | $11,528 |
| Net Interest Expense (MM) | -$454 | -$563 | -$603 | -$562 |
| Depreciation & Amort. (MM) | -$2,255 | -$2,351 | -$2,405 | -$2,473 |
| Earnings Per Share | $5.85 | -$3.49 | $2.28 | $35.12 |
| EPS Growth | n/a | -159.66% | 165.33% | 1440.35% |
| Diluted Shares (MM) | 414 | 407 | 408 | 362 |
| Free Cash Flow (MM) | $7,158 | $1,962 | $6,102 | $13,330 |
| Capital Expenditures (MM) | -$1,627 | -$1,014 | -$243 | -$756 |
| Net Current Assets (MM) | -$12,359 | -$16,288 | -$16,906 | -$11,381 |
| Current Ratio | 1.44 | 1.71 | 1.26 | 1.38 |
| Long Term Debt (MM) | $9,178 | $13,954 | $12,606 | $10,526 |
| Net Debt / EBITDA | 1.6 | 4.74 | 2.65 | 0.61 |
Valero Energy has exceptional EPS growth and low leverage. Additionally, the company's financial statements display growing revenues and decreasing reinvestment in the business and generally positive cash flows. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a positive growth rate. Finally, we note that Valero Energy has just enough current assets to cover current liabilities.
The Market Is Undervaluing Valero Energy:
Valero Energy has a trailing twelve month P/E ratio of 3.2, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $13.19, the company has a forward P/E ratio of 8.7. According to the 17.7% compound average growth rate of Valero Energy's historical and projected earnings per share, the company's PEG ratio is 0.18. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.0%. On this basis, the company's PEG ratio is 0.33. This suggests that its shares are undervalued. The market is placing a fair value on Valero Energy's equity, since its P/B ratio of 1.83 is comparable to its sector average of 1.68. The company's shares are currently trading 1.5% below their Graham number.
Valero Energy Has an Average Rating of Buy:
The 16 analysts following Valero Energy have set target prices ranging from $118.0 to $160.0 per share, for an average of $142.4 with a buy rating. As of April 2023, the company is trading -19.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Valero Energy has an average amount of shares sold short because 2.9% of the company's shares are sold short. Institutions own 83.8% of the company's shares, and the insider ownership rate stands at 0.55%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $4,470,375,080.
