San Antonio-based Valero Energy Corporation (VLO), founded in 1980, is a leading force in the production and distribution of transportation fuels and petrochemicals. With operations spanning the U.S., UK, Ireland, and Canada, Valero refines crude oil into high-quality gasoline, diesel, jet fuel, and asphalt. Not stopping at traditional fuels, Valero has made significant strides in renewable energy, boasting a robust ethanol and renewable diesel business. Valero’s market cap currently stands at $49.4 billion, reflecting its substantial impact and innovation in the energy sector.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Valero Energy fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size and influence in the oil & gas industry. Its strategic moves, robust demand for refined fuels, and ventures into renewable energy have catapulted Valero into this elite league of significant industry players.
However, Valero Energy took a hit, slipping 18.9% from its 52-week high of $184.79, which is also its all-time high, achieved on April 5. Shares of Valero declined 9.8% over the past three months, trailing behind the S&P 500 Energy Sector SPDR’s (XLE) more modest 2.7% dip during the same time frame.
Despite the short-term slump, in the longer term, VLO stock has rallied 15.3% on a YTD basis and gained 31.3% over the past 52 weeks, outpacing XLE’s 5.7% returns in 2024 and 9.6% gains over the past year.
To confirm this bullish trend, VLO has been trading over the 200-day moving average since mid-December, although it has dipped below the 50-day moving average since late April.
Valero Energy has displayed notable resilience amid market shifts. Operating 15 refineries with a combined capacity of 3 million barrels per day, Valero capitalizes on consistent demand for fuels and petrochemicals. Its venture into renewable diesel production and ownership of ethanol assets has been boosting investor sentiment. Moreover, following a $1.07 per share quarterly dividend announcement on May 15, Valero shares surged 6.4% in the subsequent trading sessions.
However, concerns over refining conditions and diesel margins led to recent share pullbacks. Geopolitical unrest, supply chain disruptions, and regulatory changes contributed to this trend. Besides reporting a better-than-expected Q1 bottom line figure on April 25, VLO stock has dipped due to a 53.8% annual drop in adjusted EPS to $3.82 and a 12.8% revenue decline to $31.8 billion. Market turbulence, fueled by global disruptions and economic uncertainties, continues to influence Valero's performance.
Nevertheless, Valero Energy's competitor, PBF Energy, Inc. (PBF), underperforms – not just VLO but the energy sector. Shares of PBF Energy have declined 2% on a YTD basis and are up 6% over the past 52 weeks.
Wall Street remains cautiously bullish on VLO's prospects. The company has a consensus rating of “Moderate Buy” from the 16 analysts covering the stock. The mean target of $178.88 suggests a 19.3% premium from current price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
