Considerations Before Investing in VLO

Valero Energy logged a 2.2% change during today's afternoon session, and is now trading at a price of $140.84 per share.

Valero Energy returned gains of 7.6% last year, with its stock price reaching a high of $152.2 and a low of $104.18. Over the same period, the stock underperformed the S&P 500 index by -13.0%. The company's 50-day average price was $129.28. 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. The large-cap Energy company is based in San Antonio, TX. Valero Energy has offered a 3.0% dividend yield over the last 12 months.

The Company Enjoys Exceptional EPS Growth:

2018 2019 2020 2021 2022 2023
Revenue (MM) $117,033 $108,324 $64,912 $113,977 $176,383 $151,098
Revenue Growth n/a -7.44% -40.08% 75.59% 54.75% -14.34%
Operating Margins 4% 4% -2% 2% 9% 10%
Net Margins 3% 2% -2% 1% 7% 7%
Net Income (MM) $3,122 $2,422 -$1,421 $930 $11,528 $10,746
Net Interest Expense (MM) $470 $454 $563 $603 $562 $580
Depreciation & Amort. (MM) $52 $53 $48 $47 $45 $43
Earnings Per Share $7.29 $5.84 -$3.5 $2.27 $29.04 $29.25
EPS Growth n/a -19.89% -159.93% 164.86% 1179.3% 0.72%
Diluted Shares (MM) 428 414 407 407 396 349
Free Cash Flow (MM) $3,456 $5,531 -$66 $5,859 $12,574 $12,086
Current Ratio 1.65 1.44 1.71 1.26 1.38 1.51
Total Debt (MM) $9,109 $9,672 $14,677 $13,870 $11,635 $11,441
Net Debt / EBITDA 1.33 1.82 -7.42 4.48 0.43 0.38

Valero Energy has exceptional EPS growth, generally positive cash flows, and healthy leverage levels. Furthermore, Valero Energy has weak operating margins with a positive growth rate and just enough current assets to cover current liabilities.

Trades Below Its Graham Number but Has an Elevated P/B Ratio:

Valero Energy has a trailing twelve month P/E ratio of 5.2, compared to an average of 8.53 for the Energy sector. Based on its EPS guidance of $13.06, the company has a forward P/E ratio of 9.9. The 8.7% compound average growth rate of Valero Energy's historical and projected earnings per share yields a PEG ratio of 0.6. 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 1.85 is comparable to its sector average of 1.78. The company's shares are currently trading -36.4% below their Graham number.

Valero Energy Has an Analyst Consensus of Some Upside Potential:

The 16 analysts following Valero Energy have set target prices ranging from $135.0 to $170.0 per share, for an average of $150.19 with a buy rating. The company is trading -6.2% 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 3.0% of the company's shares are sold short. Institutions own 80.6% of the company's shares, and the insider ownership rate stands at 0.48%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $4,671,354,849.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.