Valero Energy Corporation (VLO), headquartered in San Antonio, Texas, manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products. Valued at $45 billion by market cap, the company produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products, as well as offers diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel, and oxygenates.
Shares of this largest independent refiner have underperformed the broader market considerably over the past year. VLO has gained 13.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.1%. In 2024, VLO’s stock rose 8.6%, compared to the SPX’s 24.1% rise on a YTD basis.
Narrowing the focus, VLO’s outperformance is apparent compared to the VanEck Oil Refiners ETF (CRAK). The exchange-traded fund has declined about 10.5% over the past year. Moreover, VLO’s returns on a YTD basis outshine the ETF’s 8.4% losses over the same time frame.
On Oct. 24, VLO shares closed down more than 1% after reporting its Q3 results. Its EPS of $1.14 missed Wall Street expectations of $1.29. The company’s revenue was $32.9 billion, missing Wall Street forecasts of $33 billion.
For the current fiscal year, ending in December, analysts expect VLO’s EPS to decline 64.2% to $8.92 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 18 analysts covering VLO stock, the consensus is a “Strong Buy.” That’s based on 14 “Strong Buy” ratings, three “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with 13 analysts suggesting a “Strong Buy.”
On Nov. 11, Barclays PLC (BCS) analyst Theresa Chen kept an “Overweight” rating and lowered the price target on VLO to $140.
The mean price target of $153.33 represents an 8.6% premium to VLO’s current price levels. The Street-high price target of $176 suggests an upside potential of 24.6%.
