If You Invested $1000 in Valero Energy 10 Years Ago, This Is How Much You'd Have Now
How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Valero Energy (VLO) ten years ago? It may not have been easy to hold on to VLO for all that time, but if you did, how much would your investment be worth today?
Valero Energy's Business In-Depth
With that in mind, let's take a look at Valero Energy's main business drivers.
San Antonio, TX-based Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the United States. The company was founded in 1980. It has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.
Moreover, Valero is a leading ethanol producer with 14 ethanol plants in the Midwest that have a combined capacity of 1.73 billion gallons per year. The products of the company are sold in the markets of the United States, Canada, the United Kingdom, Ireland and Latin America. The company’s brand names are carried by around 7,000 outlets.
The company organizes its business through three reportable segments, namely, Refining, Ethanol and Renewable Diesel.
Refining: The Refining segment was responsible for 80% of the total margin in 2020. It includes refining operations, wholesale marketing, product supply and distribution, and transportation operations. This segment is segregated geographically into the Gulf Coast, mid-continent, West Coast and Northeast regions.
Ethanol: The Ethanol segment includes sales of internally produced ethanol and distillers grains. Operations of this segment are geographically located in the Central Plains region of the United States. This segment was responsible for 7% of the total margin in 2020.
Renewable Diesel: In the first quarter of 2019, the company created this segment. The Renewable Diesel segment incorporates the operations of a consolidated joint venture, Diamond Green Diesel. Notably, the renewable diesel plant is North America’s largest biomass-based diesel plant and it is located in Norco, LA. The segment provided 13% of the total margin in 2020, which was supported by the expansion of the Diamond Green Diesel plant.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Valero Energy ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in January 2012 would be worth $3,715.40, or a gain of 271.54%, as of January 19, 2022, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 249.92% and the price of gold went up 5.07% over the same time frame.
Going forward, analysts are expecting more upside for VLO.
Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.1 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean. The majority of its refining plants are located in the Gulf coast area from where there is easy access to the export facilities. The Gulf coast presence helped Valero expand its export volumes over the last few years and gain from high distillate margins. Notably, it is poised to benefit from the new standard set by the International Maritime Organization. However, the company expects its operating expense per gallon of renewable diesel production to increase in 2021, affecting the bottom line. Also, uncertain refining business is making the company’s near-term outlook gloomy. As such, the stock warrants a cautious stance.
Shares have gained 20.08% over the past four weeks and there have been 3 higher earnings estimate revisions for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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