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Here's Why Hold Strategy is Apt For Valero (VLO) Stock Now

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Valero Energy Corporation (VLO - Free Report) has seen no earnings estimate revisions for 2023 and 2024, in the past seven days. The Zacks Consensus Estimate for earnings for 2023 and 2024 is pegged at $22.35 and $14.58 per share, respectively.

What’s Favoring the Stock?

Valero, carrying a Zacks Rank #3 (Hold), is a best-in-class oil refiner involved in producing fuels and products that can meet the demand of modern life. Its refineries are located across the United States, Canada and the U.K. A total of 15 petroleum refineries where Valero has ownership interests have a combined throughput capacity of approximately 3.2 million barrels per day.

The Renewable Diesel business segment of VLO comprises the Diamond Green Diesel (DGD) joint venture. DGD, a joint venture between Darling Ingredients Inc. and Valero, is a leading renewable fuel producer in North America. Low-carbon fuel policies across the globe primarily are aiding the demand for renewable diesel, therefore driving Valero’s Renewable Diesel business unit.

Valero boasts that its premium refining operations are resilient even when the business operating environment is carbon-constrained. Its refining business has the capabilities to generate handsome cashflows that would allow it to return capital to shareholders and back growth projects.

Risks

However, rising operating expenses are hurting VLO’s bottom line. Being a premium refiner, the firm’s input cost is highly fluctuating, given the volatile pricing scenario of crude oil.

Stocks to Consider

Better-ranked players in the energy space include Murphy USA Inc. (MUSA - Free Report) , Sunoco LP (SUN - Free Report) and Dril-Quip, Inc. (DRQ - Free Report) . While Murphy USA and Dril-Quip carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is a leading retailer of gasoline. MUSA has more than 1,700 stores and has witnessed upward earnings estimate revisions for 2023 earnings in the past seven days.

Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.

Dril-Quip is a leading provider of highly engineered equipment, service and innovative technologies that are being employed in the energy sector.

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