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Valero Energy (VLO) Gains But Lags Market: What You Should Know

Zacks Equity Research

Valero Energy (VLO) closed at $83.35 in the latest trading session, marking a +0.13% move from the prior day. This move lagged the S&P 500's daily gain of 0.36%. Meanwhile, the Dow gained 0.01%, and the Nasdaq, a tech-heavy index, added 0.27%.

Prior to today's trading, shares of the oil refiner had gained 6.5% over the past month. This has outpaced the Oils-Energy sector's gain of 1.76% and the S&P 500's gain of 3.98% in that time.

Investors will be hoping for strength from VLO as it approaches its next earnings release, which is expected to be July 25, 2019. On that day, VLO is projected to report earnings of $1.55 per share, which would represent a year-over-year decline of 27.91%. Our most recent consensus estimate is calling for quarterly revenue of $26.65 billion, down 14.06% from the year-ago period.

VLO's full-year Zacks Consensus Estimates are calling for earnings of $5.73 per share and revenue of $107.83 billion. These results would represent year-over-year changes of -22.25% and -7.86%, respectively.

It is also important to note the recent changes to analyst estimates for VLO. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 8.89% lower within the past month. VLO is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, VLO is currently trading at a Forward P/E ratio of 14.52. This valuation marks a discount compared to its industry's average Forward P/E of 15.01.

Meanwhile, VLO's PEG ratio is currently 1.82. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. VLO's industry had an average PEG ratio of 2.33 as of yesterday's close.

The Oil and Gas - Refining and Marketing industry is part of the Oils-Energy sector. This industry currently has a Zacks Industry Rank of 39, which puts it in the top 16% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow VLO in the coming trading sessions, be sure to utilize Zacks.com.

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