Valero Energy logged a 2.8% change during today's afternoon session, and is now trading at a price of $138.65 per share.
Valero Energy returned gains of 22.0% last year, with its stock price reaching a high of $150.39 and a low of $97.73. Over the same period, the stock outperformed the S&P 500 index by 16.0%. More recently, the company's 50-day average price was $117.79. 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 3.0% dividend yield over the last 12 months.
Exceptional EPS Growth at the Expense of a Highly Leveraged Balance Sheet:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $108,324 | $64,912 | $113,977 | $176,383 |
| Gross Margins | 4.4% | -1.2% | 2.7% | 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 | $5.84 | -$3.5 | $2.27 | $35.12 |
| EPS Growth | n/a | -159.93% | 164.86% | 1447.14% |
| Diluted Shares (MM) | 414 | 407 | 407 | 362 |
| Free Cash Flow (MM) | $315 | $1,018 | $439 | $661 |
| Capital Expenditures (MM) | -$1,997 | -$1,788 | -$1,665 | -$1,681 |
| 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 | $10,840 | $8,380 |
| Net Debt / EBITDA | 1.27 | 19.74 | 1.98 | 0.27 |
Valero Energy has exceptional EPS growth, growing revenues and decreasing reinvestment in the business, and generally positive cash flows. However, Valero Energy has slimmer gross margins than its peers, weak operating margins with a positive growth rate, and a highly leveraged balance sheet. Finally, we note that Valero Energy has just enough current assets to cover current liabilities.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Valero Energy has a trailing twelve month P/E ratio of 3.4, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $13.99, the company has a forward P/E ratio of 8.4. According to the 19.1% 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 10.1%. On this basis, the company's PEG ratio is 0.33. This suggests that its shares are undervalued. In contrast, Valero Energy is likely overvalued compared to the book value of its equity, since its P/B ratio of 1.89 is higher than the sector average of 1.68. The company's shares are currently trading 8.4% above their Graham number.
Valero Energy Has an Average Rating of Buy:
The 17 analysts following Valero Energy have set target prices ranging from $130.0 to $160.0 per share, for an average of $147.29 with a buy rating. As of April 2023, the company is trading -20.0% 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 3.1% of the company's shares are sold short. Institutions own 81.1% of the company's shares, and the insider ownership rate stands at 0.56%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $4,912,168,934.
