Which Refiner Has the Highest ROE and ROIC?


Sep. 5 2016, Updated 11:04 a.m. ET

ROE and ROIC among refiners

In this article, we’ll look at the returns on equity (or ROE) and returns on invested capital (or ROIC) of American refiners Marathon Petroleum (MPC), Tesoro (TSO), Valero Energy (VLO), and Phillips 66 (PSX).

ROE measures the profit a company generates in comparison to shareholder equity. ROIC indicates how much after-tax operating income a company produces compared to its total invested capital, including debt and equity.

Of these refiners, Tesoro (TSO) has the highest ROE and ROIC of 26% and 13%, respectively. On the other hand, Phillips 66 (PSX) has the lowest returns in both metrics. PSX’s ROE stands at 13%, and its ROIC stands at 7%.

Of the other two refiners, MPC has better ROE than VLO, but VLO has better ROIC than MPC. The Vanguard Energy ETF (VDE) has ~8% exposure to the refining sector.

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