Valero Energy (NYSE: VLO) and BP (NYSE:BP) are both large-cap energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, risk and profitability.
Volatility and Risk
Valero Energy has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, BP has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.
Valero Energy pays an annual dividend of $2.80 per share and has a dividend yield of 2.9%. BP pays an annual dividend of $2.38 per share and has a dividend yield of 5.6%. Valero Energy pays out 60.7% of its earnings in the form of a dividend. BP pays out 203.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Valero Energy has increased its dividend for 7 consecutive years.
This is a summary of recent recommendations and price targets for Valero Energy and BP, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Valero Energy currently has a consensus price target of $82.27, indicating a potential downside of 15.42%. BP has a consensus price target of $37.73, indicating a potential downside of 11.02%. Given BP’s higher probable upside, analysts clearly believe BP is more favorable than Valero Energy.
Valuation & Earnings
This table compares Valero Energy and BP’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Valero Energy||$75.66 billion||0.56||$2.29 billion||$4.61||21.10|
|BP||$186.61 billion||0.75||$115.00 million||$1.17||36.24|
Valero Energy has higher earnings, but lower revenue than BP. Valero Energy is trading at a lower price-to-earnings ratio than BP, indicating that it is currently the more affordable of the two stocks.
This table compares Valero Energy and BP’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
81.4% of Valero Energy shares are held by institutional investors. Comparatively, 9.9% of BP shares are held by institutional investors. 0.5% of Valero Energy shares are held by insiders. Comparatively, 1.0% of BP shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valero Energy beats BP on 10 of the 16 factors compared between the two stocks.
About Valero Energy
Valero Energy Corporation (Valero) is an independent petroleum refiner and ethanol producer. The Company’s segments include refining, ethanol and Valero Energy Partners LP (VLP). The refining segment includes its refining operations and the associated marketing activities. The ethanol segment includes its ethanol operations and the associated marketing activities, and logistics assets that support its ethanol operations. The Company owns logistics assets (crude oil pipelines, refined petroleum product pipelines, terminals, tanks, marine docks, truck rack bays and other assets) that support its refining operations. Some of these assets are owned by VLP, which is a midstream master limited partnership owned by the Company. VLP’s assets include crude oil and refined petroleum products pipeline and terminal systems in the United States Gulf Coast and the United States Mid-Continent regions. Its refineries produce conventional gasolines, premium gasolines and lubricants, among others.
BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company’s segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.
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