Valero Energy Faces Market Challenges Despite Long-Term Optimism
Valero Energy Corporation (VLO), boasting a market cap of $39.9 billion, stands as a significant player in the petroleum and low-carbon fuel sector. This multinational manufacturer and marketer, based in San Antonio, Texas, operates through three key segments: Refining, Renewable Diesel, and Ethanol.
Companies valued at $10 billion or more are categorized as “large-cap,” and Valero Energy meets this standard. The company primarily markets its products across the United States, Canada, the United Kingdom, Ireland, and Latin America. Additionally, Valero owns more than 15 petroleum refineries located in these regions.
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Recent Stock Performance Overview
Valero’s stock has experienced a notable decline, dropping 31.4% from its 52-week high of $184.79. In the past three months, VLO shares have fallen 4.2%, which is a smaller decrease compared to the broader Nasdaq Composite’s (NASDAQ) 12.8% drop during the same period.
Looking at the longer term, VLO has shown a slight increase of 3.4% year-to-date (YTD), contrasting with the Nasdaq’s 9.5% loss. However, over the past 52 weeks, VLO shares have decreased by 15.2%, underperforming the Nasdaq’s 9.1% gain.
Trading Trends and Moving Averages
Since mid-September last year, Valero’s stock has consistently traded below its 200-day moving average. Additionally, it has remained below its 50-day moving average since May, indicating potential challenges in price momentum despite occasional fluctuations.
Fourth Quarter Earnings Report
On January 30, Valero reported better-than-expected adjusted earnings for Q4 2024, with earnings per share (EPS) of $0.64 and revenue hitting $30.8 billion. Despite these figures, the stock dropped by 2.9%. The results, however, showcased a stark year-over-year decline, as adjusted EPS fell by 82.1%, net income decreased 76.6% to $281 million, and operating income sank 77.6% to $348 million. Refining margins, a crucial part of Valero’s profitability, also suffered with operating income from the refining segment down 72.7% to $437 million.
Investor Sentiment and Industry Comparison
Despite a 6% increase in dividends, investors remain wary due to escalating operational costs, macroeconomic uncertainties, and fluctuating conditions in the energy market. In comparison, Valero’s competitor, Marathon Petroleum Corporation (MPC), has had a rougher time, with shares declining 24.1% over the last year and also falling 2.3% YTD.
Nevertheless, optimism persists regarding Valero’s long-term prospects. Among the 18 analysts monitoring the stock, there is a consensus of “Strong Buy,” and Valero is trading below the average price target of $151.22.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information provided is intended solely for informational purposes. For further details, please review the Barchart Disclosure Policy here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
