Sure thing. If you can hold the stock over the summer and wait until fall when it typically starts to rise again, you will be rewarded as at some point, the value of this company will be realized. You are good shape if you are more of a long term holder. They are going to return half or more of their earnings to shareholders this year through dividends and stock buy backs.
They have proven they can make money in both high and low oil price environment which proves less risk than other oil type company investments so this should be realized in the stock price too.
This is great news for Valero and other US Gulf Coast refiners that export.
The company's downstream plans have been gutted. Plans to add 900,000 b/d of capacity at two refineries, Premium 1 and 2, have been scrapped, and Petrobras now says the 165,000 b/d Comperj refinery and the second 115,000 b/d phase of the Abreu e Lima refinery will be postponed for an extended period. The company booked an $11.6bn write-down on Comperj and Abreu e Lima, increasing doubts that the projects, both more than 80pc advanced, will be completed.
In 2014, Petrobras' domestic refinery utilization averaged 2.17mn b/d, up by 2pc compared with 2013. The refineries operated at 98pc of capacity, a 1pc year-on-year increase.
Obviously I hope so. It should be a $70 stock but the institutions control the stock and the stock price. I am a bit worried that analyst estimates have risen the bar so high, Valero may not beat the estimates much because first quarter was a heavy turnaround (maintenance) for Valero's refineries. When your refineries are down, doesn't matter how high the crack spread is. They weren't able to capture some of the good margins in the first quarter. But the rest of the year, they don't have much turnaround work planned so it is out of the way.
I also think Valero is a huge sell in May and go away. Sometime it is sell in April and go away. The peak last year I believe was May 6.
The action today was because of the higher than expected build in crude supplies today released at the EIA report and the corresponding result of larger spread between WTI and Brent. Higher crack spread today helped too.
My Charles Schwab account shows a Charles Schwab Equity Rating of 6 out of 100 which is an outperform rating. Which is a B+ and one rating point away from an A, which is a strongly outperform rating.
Yes sir. And $75 would only be a PE of about 10.75 based on last year earning.
By the way, the proper way to state the dollar sign is in front of the number, like $75. Let's hope it is written like this: $80.
Not a bad day for Valero long investors. Not bad at all.
03/19/15 02:57 pm ET ... S&P CAPITAL IQ UPGRADES VIEW ON
SHARES OF VALERO ENERGY TO STRONG BUY FROM BUY (VLO
60.68*****): Platts notes exports of distillates from the U.S. Gulf
Coast could be on the rise in coming months, buoyed by European
maintenance season and chronic struggling by European refineries
to compete globally. VLO, with high exposure to the U.S. Gulf, could
be a beneficiary in this regard in our view. We lift our '15 EPS
estimate by $1.42 to $6.51, but cut '16's by $1.67 to $5.35. Our
12-month target price of $71, raised by $13, reflects a 6.3X multiple
of enterprise value to projected '16 EBITDA, in line with peers.
Shares of VLO also yield 2.6%, with Q1 dividend raised 45% vs. Q4.
/S. Glickman, CFA
Sure thing, Please don't take my comment as not bullish on Valero. I think it is extremely undervalued and looking for it to hit $70 this Spring.
Thanks for the post. The strike only affected production at one refinery in California. So 20% was not taken off line because of this and maintenance the last few weeks. I wish it were! All the other refineries that had strikes, used management and other replacement workers to keep the refineries running. Refineries operated at about 88% capacity last week which is about normal for this time of year but this quarter did have a number of unplanned outages at various refineries that helped margins.
They are taking on some additional reasonable debt before interest rates rise while maintaining their investment grade credit rating. The reason that they issued the debt, is to keep a cash war chest while at the same time investing in two big projects, methanol and alkaline projects, buying back undervalued stock, and at the same time of having a competitive dividend. I see no problem with this but obviously the market is looking at this negatively as a sign of weakness.
I agree. They are taking on some additional reasonable debt before interest rates rise while maintaining their investment grade credit rating. The reason that they issued the debt, is to keep a cash war chest while at the same time investing in two big projects, methanol and alkaline projects, buying back undervalued stock, and at the same time of having a competitive dividend. I see no problem with this but obviously the market is looking at this negatively as a sign of weakness.
From Seeking Alpha article yesterday:
Despite the recent surge in its price, VLO's stock is still cheap considering its valuation metrics. The forward P/E is very low at 10.10, and its price-to-sales ratio is extremely low at 0.24. Moreover, Valero's Enterprise Value/EBITDA ratio is also extremely low at 4.31, the ninth lowest among all S&P 500 stocks.
I love the low enterprise to EBITDA ratio! 9th lowest in S&P 500!
Thanks Tesoro for taking one for the team. Don't start up Martinez.
US West Coast cracking margins jump on Torrance blast, ongoing strike
New York (Platts)--24Feb2015/251 pm EST/1951 GMT
Refinery profit margins on the US West Coast have spiked over the past week as a Los Angeles-area explosion and an ongoing strike by refinery workers has taken almost 25% of the region's gasoline-making capacity offline, Platts data showed Tuesday.
Cracking margin netbacks for West Coast refiners running local Kern River crude were $31.75/barrel on Monday, up from $18.96/b prior to last Wednesday's explosion at ExxonMobil's 149,500 b/d refinery in Torrance.
The blast idled the plant's 88,000 b/d gasoline-making fluid catalytic cracker.
The margin for Alaska North Slope jumped to $30.85/b Monday from $14.10/b prior to the explosion, while the cracking margin for imported Arab Medium crude $28.09/b, up from $11.59/b.
Meanwhile, the strike by US refinery workers that began February 1 is also weighing on West Coast operations, with Tesoro's 166,000 b/d Golden Eagle refinery in Martinez, California, idled in the wake of the job action.
Tesoro CEO Greg Goff said last week plans were under way to restart the plant, which had been in the closing stages of a maintenance turnaround when the strike began. Tesoro spokeswoman Tina Barbee said Monday the company still plans to finish the turnaround and restart the plant, but she "would not speculate on when this might happen."
keeps an average of a 24-day supply on hand, a standard California lawmakers should mandate refineries should mandate refineries meet in California."meet in California."
California's gasoline market is controlled by a handful of big companies that retain a monopoly grip on California's gasoline supply because they produce almost all of its supply in order to meet stricter environmental standards.
Wholesale spot prices in Los Angeles climbed another 14 cents last night, reaching $2.17 per gallon, a 50-cent increase since the Martinez shutdown began. Spot prices in Los Angeles hadn't reached that height since November 12th of last year.
Fat lady is singing.