Valero Energy (VLO) AI Stock Analysis

• Market Cap: $36.45B
• Dividend Yield: 3.74%
• Average Volume (3M): 4.14M
• Price to Earnings (P/E): 13.5
• Beta (1Y): 1.01
• Revenue Growth: -10.37%
• EPS Growth: -65.69%
• Country: US
• Employees: 9,898
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Refining & Marketing
• EPS (TTM): 8.49
• Shares Outstanding: 314,460,660
• 10 Day Avg. Volume: 4,870,478
• 30 Day Avg. Volume: 4,136,151
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.33
• Price to Cash Flow (P/CF): 9.70
• P/FCF Ratio: 8.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $151.92
• Price Target Upside: 39.36% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 12

Valero Energy's overall score reflects a balance of solid financial management and valuation against the backdrop of technical weakness and operational challenges. The company's strong cash flow and stable balance sheet provide a buffer against industry volatility, yet declining profitability and bearish stock trends warrant caution. Investors might find the current dividend yield and valuation appealing, but should be mindful of the mixed operational outlook presented in the recent earnings call.

Positive Factors

Competitive Advantages

VLO's strong presence in the US Gulf Coast and mid-continent, with flexible sourcing and skilled labor access, offers significant competitive advantages.

Earnings Performance

Valero reported stronger than expected refining and renewable diesel margins, driving a significant earnings beat.

Financial Stability

Valero is expected to net over $200 million from recent bond refinancings, which could support financial stability.

Negative Factors

Financial Constraints

The buyback activity may be lower than previous quarters, reflecting financial constraints.

Operational Challenges

An unplanned outage at Corpus Christi is affecting Gulf Coast throughput, leading to lower guidance.

Tax Credit Uncertainty

The lack of clarity around the replacement of the Blenders Tax Credit with the Production Tax Credit creates uncertainty for renewable diesel results.

Valero Energy Business Overview & Revenue Model

Company Description

Valero Energy Corporation manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Refining, Renewable Diesel, and Ethanol. It produces conventional, premium, and reformulated gasolines; gasoline meeting the specifications of the California Air Resources Board (CARB); diesel fuels, and low-sulfur and ultra-low-sulfur diesel fuels; CARB diesel; other distillates; jet fuels; blendstocks; and asphalts, petrochemicals, lubricants, and other refined petroleum products, as well as sells lube oils and natural gas liquids. As of December 31, 2021, the company owned 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day; and 12 ethanol plants with a combined ethanol production capacity of approximately 1.6 billion gallons per year. It sells its refined products through wholesale rack and bulk markets; and through approximately 7,000 outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company also produces and sells ethanol, dry distiller grains, syrup, and inedible corn oil primarily to animal feed customers. In addition, it owns and operates crude oil and refined petroleum products pipelines, terminals, tanks, marine docks, truck rack bays, and other logistics assets; and owns and operates a plant that processes animal fats, used cooking oils, and inedible distillers corn oils into renewable diesel. 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.

How the Company Makes Money

Valero Energy makes money primarily through its refining and marketing operations. The company's revenue is largely derived from refining crude oil into various petroleum products, which are then sold through wholesale and retail channels. Key revenue streams include the sale of gasoline, diesel, and jet fuel, as well as petrochemical feedstocks and other refined products. Valero also generates income from ethanol production and wholesale marketing operations. Strategic partnerships and supply agreements with retailers and distributors enhance its market reach, while its extensive logistics network supports efficient distribution. Factors such as crude oil prices, refining margins, and demand for refined products significantly impact Valero's earnings.

Valero Energy Financial Statement Overview

Summary

Valero Energy shows a mixed financial performance, with strengths in cash flow generation and a stable balance sheet. The company maintains positive cash flow and conservative leverage, but declining revenues and net profit margins suggest pressure on profitability. Maintaining revenue growth will be crucial for future success.

Income Statement

The income statement reveals a volatile revenue pattern with a significant drop in total revenue in 2024. Despite this, Valero Energy managed to maintain positive EBIT and EBITDA margins due to effective cost management, resulting in an EBIT margin of 3.6% and an EBITDA margin of 5.6% for 2024. However, the net profit margin has declined, indicating decreasing profitability.

Balance Sheet

Valero's balance sheet shows a stable equity position and a manageable debt level. The debt-to-equity ratio is approximately 0.43, reflecting a conservative leverage approach. However, a reduction in stockholders' equity over recent years could be a concern. The equity ratio stands at 40.7%, indicating a solid financial structure.

Cash Flow

The cash flow statement demonstrates robust operating cash flows and a positive free cash flow, despite fluctuations in revenue. The free cash flow to net income ratio for 2024 is positive, indicating efficient cash conversion. However, the company has faced challenges achieving consistent free cash flow growth, which presents a risk.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
129.88B	144.77B	176.38B	113.98B	64.91B
	Gross Profit
4.76B	12.90B	16.75B	3.08B	-788.00M
	EBIT
3.75B	11.86B	15.69B	2.13B	-1.58B
	EBITDA
7.03B	14.66B	18.34B	4.55B	904.00M
	Net Income Common Stockholders
2.77B	8.84B	11.53B	1.29B	-1.11B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.66B	5.42B	4.86B	4.12B	3.31B
	Total Assets
60.14B	63.06B	60.98B	57.89B	51.77B
	Total Debt
11.54B	12.64B	3.57B	1.92B	15.85B
	Net Debt
6.88B	7.21B	-1.30B	-2.20B	12.53B
	Total Liabilities
32.62B	34.53B	35.51B	38.07B	32.13B
	Stockholders Equity
24.51B	26.35B	23.56B	18.43B	18.80B
Cash Flow		Free Cash Flow
6.68B	8.32B	-1.02B	-1.23B	-770.00M
	Operating Cash Flow
6.68B	9.23B	661.00M	439.00M	1.02B
	Investing Cash Flow
-1.98B	-1.86B	-2.81B	-2.16B	-2.42B
	Financing Cash Flow
-5.05B	-6.94B	-8.85B	-2.85B	2.08B

Valero Energy Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 109.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VLO, the sentiment is Negative. The current price of 109.01 is below the 20-day moving average (MA) of 125.63, below the 50-day MA of 129.58, and below the 200-day MA of 135.26, indicating a bearish trend. The MACD of 0.52 indicates Negative momentum. The RSI at 54.47 is Neutral, neither overbought nor oversold. The STOCH value of 32.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VLO.

Valero Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MPC	67 Neutral	$40.94B	13.02	16.33%	2.64%	-6.70%	-57.85%
PSX	65 Neutral	$42.05B	20.65	7.27%	4.46%	-2.81%	-68.00%
VLO	59 Neutral	$36.45B	13.51	10.86%	3.74%	-10.37%	-65.69%
Sector *	57 Neutral	$7.72B	4.32	-3.75%	6.33%	-0.11%	-64.75%
CVI	55 Neutral	$1.77B	252.59	0.90%	11.38%	-17.69%	-99.09%
PBF	48 Neutral	$1.90B	―	-8.87%	6.39%	-13.59%	-127.47%
DK	47 Neutral	$811.06M	―	-108.21%	7.74%	-28.68%	-4373.94%

Valero Energy Corporate Events

Valero Energy Announces Leadership Transition for 2024

Valero Energy Corporation has announced the retirement of Joseph W. Gorder as Executive Chairman and board member by the end of 2024, with R. Lane Riggs, current CEO and President, stepping up as the new Chairman of the Board. This leadership transition, which decreases the board size to 10, is part of Valero’s strategic planning, though actual outcomes may vary due to unforeseen factors.