Stock of the Day

July 6, 2020

Valero Energy (VLO)

$126.78
+$0.24 (+0.2%)
Market Cap: $39.71B

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.:

  • The current stock price is around $128.80, which may present a buying opportunity for investors looking for value in the energy sector.
  • Valero Energy Co. has a strong institutional ownership, with approximately 78.69% of its stock held by institutional investors, indicating confidence from major financial entities.
  • Recent analyst ratings show a consensus rating of "Buy" with a target price around $151.93, suggesting potential for price appreciation.
  • The company has demonstrated resilience with a solid market capitalization of over $40 billion, which reflects its stability and growth potential in the oil and gas industry.
  • Valero Energy Co. has a favorable debt-to-equity ratio of 0.35, indicating a manageable level of debt relative to its equity, which can be a positive sign for financial health.

Valero Energy Bear Case

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

  • Despite a strong market position, the stock has experienced fluctuations, with a 52-week high of $167.78 and a low of $99.00, indicating volatility that may concern risk-averse investors.
  • Recent price target reductions by analysts, such as from $165.00 to $155.00, may signal a lack of confidence in short-term performance.
  • The company has a P/E ratio of 15.19, which, while not excessively high, may suggest that the stock is fairly valued, limiting upside potential.
  • Valero Energy Co. operates in a highly competitive and regulated industry, which can impact profitability and growth prospects.
  • Market conditions, including fluctuating oil prices and geopolitical factors, can adversely affect the company's performance, making it a riskier investment in uncertain times.
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