Goldman Sachs has adjusted its rating on Valero (VLO, Financial) from Sell to Neutral, reflecting changes in market dynamics and refined estimates of the company’s financial outlook. The price target for VLO has been increased to $127 from a previous $115, highlighting a more optimistic stance from the firm.
Analysts at Goldman Sachs noted that the refining profitability of Valero is experiencing a decline, which has resulted in a 50% downgrade in earnings projections for 2025 over the past year. Despite this, the crude oil market is showing signs of improvement, with OPEC incrementally increasing oil supply. This development is expected to enhance crude differentials, potentially bolstering Valero's profit margins.
These factors contribute to a more balanced view of Valero's financial prospects, prompting the upgrade to a Neutral rating. The adjustments in the consensus estimates now better capture the anticipated slowdown in earnings, according to the firm's research.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for Valero Energy Corp (VLO, Financial) is $142.69 with a high estimate of $160.00 and a low estimate of $118.00. The average target implies an upside of 25.31% from the current price of $113.87. More detailed estimate data can be found on the Valero Energy Corp (VLO) Forecast page.
Based on the consensus recommendation from 20 brokerage firms, Valero Energy Corp's (VLO, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Valero Energy Corp (VLO, Financial) in one year is $124.07, suggesting a upside of 8.96% from the current price of $113.87. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Valero Energy Corp (VLO) Summary page.
VLO Key Business Developments
Release Date: January 30, 2025
- Net Income (Q4 2024): $281 million or $0.88 per share.
- Adjusted Net Income (Q4 2024): $207 million or $0.64 per share.
- Net Income (Full Year 2024): $2.8 billion or $8.58 per share.
- Adjusted Net Income (Full Year 2024): $2.7 billion or $8.48 per share.
- Refining Segment Operating Income (Q4 2024): $437 million.
- Refining Throughput Volumes (Q4 2024): 3 million barrels per day.
- Refining Cash Operating Expenses (Q4 2024): $4.67 per barrel.
- Renewable Diesel Segment Operating Income (Q4 2024): $170 million.
- Renewable Diesel Sales Volumes (Q4 2024): 3.4 million gallons per day.
- Ethanol Segment Operating Income (Q4 2024): $20 million.
- Ethanol Production Volumes (Q4 2024): 4.6 million gallons per day.
- G&A Expenses (Q4 2024): $266 million.
- Depreciation and Amortization Expense (Q4 2024): $698 million.
- Net Interest Expense (Q4 2024): $135 million.
- Income Tax Benefit (Q4 2024): $34 million.
- Net Cash Provided by Operating Activities (Q4 2024): $1.1 billion.
- Capital Investments (Q4 2024): $547 million.
- Stockholder Returns (Q4 2024): $601 million, including $339 million in dividends and $262 million in stock buybacks.
- Total Debt (End of Q4 2024): $8.1 billion.
- Cash and Cash Equivalents (End of Q4 2024): $4.7 billion.
- Debt to Capitalization Ratio (End of Q4 2024): 17%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Valero Energy Corp (VLO, Financial) achieved record volumes in processing heavy sour crude, demonstrating refining system flexibility.
- The company set a record for ethanol production, aided by the expansion of the Charles City plant.
- Valero successfully started up the DGD sustainable aviation fuel project, which is now fully operational.
- The company maintained a strong shareholder return with a payout ratio of 78% for the year and increased its quarterly cash dividend by 6%.
- Valero's renewable diesel segment saw a significant increase in operating income, reaching $170 million in Q4 2024 compared to $84 million in Q4 2023.
Negative Points
- Valero Energy Corp (VLO) reported a significant decline in net income for Q4 2024, with $281 million compared to $1.2 billion in Q4 2023.
- The refining segment's operating income dropped to $437 million in Q4 2024 from $1.6 billion in Q4 2023.
- Ethanol segment operating income fell sharply to $20 million in Q4 2024 from $190 million in Q4 2023.
- The company faced a weak margin environment, impacting overall financial performance.
- Valero's refining cash operating expenses increased to $4.67 per barrel in Q4 2024.
