- Marzo 7, 2023
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
With a market-cap over $50 billion, Valero Energy is the world’s largest independent refiner.
The San Antonio, Texas-based player operates 15 refineries in the U.S., Canada and the U.K. and boasts a total throughput capacity of around 3.2 million barrels per day. Not only that, but it is also the second largest renewable fuels producer in the world.
All this adds up to a recipe for success in the current climate, as was evident in the latest fourth-quarter results. The company notched profits that more than tripled from the same period last year as net income clocked in at $3.1 billion, amounting to adj. EPS of $8.45 per share. That figure also came in well ahead of the $7.22 forecast.
Moreover, at 97%, Valero’s refineries showed their best utilization rate since 2018. This allowed the company to take advantage of the large gap between the prices of crude oil prices and refined product prices. The upshot of that was a 230% increase for the refining segment’s operating profit – to $4.1 billion.
Given the performance, Valero was also able to lower its debt load by $2.7 billion last year, and the improved balance sheet provided the company with the means to return more cash to shareholders. As such, In January, the company upped its dividend payout by ~4% to $1.02 per share. With an annualized rate of $4.08, the dividend gives a 3.1% yield.
This energy giant has drawn plaudits from Raymond James analyst Justin Jenkins, who sees plenty to like here.
“We believe Valero remains extremely well-positioned to capitalize on the strength of the global refining backdrop as the ripple effects of Europe’s energy crisis add to the advantages of VLO’s top-tier portfolio,” the 5-star analyst said.
“The company’s disciplined strategy has positioned VLO at the forefront of refining operations and broadened its footprint in both the renewable diesel and carbon capture spaces, all while re-fortifying its balance sheet. The stout combination will allow shareholder returns to ramp during 2023, positioning VLO to re-rate further.”
Accordingly, Jenkins rates VLO shares a Strong Buy while his $174 price target suggests the stock will post gains of 25% over the coming year.
Turning to the rest of the Street, the bulls have it on this one. With 14 Buys, and just a single Sell, the word on the Street is that VLO is a Strong Buy. 