uploads/2019/09/Valero-Stock.jpeg

Valero Stock: Is Now the Right Time to Buy?

By

Updated

Valero Energy (VLO) is currently trading at 14.20x its 2019 estimated EPS of $5.27. Valero stock is trading at 7.73x its 2020 estimated EPS of $9.68.

Analysts expect its adjusted EPS to fall 28.5% in 2019 but to rise 83.7% in 2020. Valero stock looks overvalued when considering its expected negative earnings growth in 2019. However, the stock also appears undervalued when considering its expected earnings growth of 83.7% and its PE ratio of 7.73x for 2020.

Valero stock rose 0.3% on September 4 and closed at $74.78. The stock’s five-day, one-month, and year-to-date price movements were 4.3%, -8.9%, and -0.3%, respectively.

Notably, the stock is trading 38.1% lower than its 52-week high of $120.72. The company is trading 8.7% higher than its 52-week low of $68.81. Valero stock has fallen 37.8% in the trailing 12-month period. On September 4, the company’s market capitalization was $31.0 billion.

Analysts’ recommendations on Valero stock

Of the 20 analysts covering Valero, 17 recommended a “buy” for the stock, while three recommended a “hold.” There were no “sell” recommendations on September 4.

Analysts have an average 12-month target price of $101.41 for Valero stock, with a median target price of $100. That means Valero is trading at a discount of 33.7% to median analyst estimates.

RSI and MACD

Valero’s 14-day RSI (relative strength index) is 43, which shows that investors are neutral toward the stock. Valero’s 14-day MACD (moving average convergence divergence) is -0.88. A negative MACD level indicates a downward trading trend.

Valero stock: Technical levels

Based on the closing price on September 4, Valero stock was trading 2.0% below its 20-day moving average of $76.30, 7.0% below its 50-day moving average of $80.44, and 7.8% below its 100-day moving average of $81.12. On the downside, the company’s immediate key support lies near $74.08, while $75.48 could act as an immediate key resistance level on a daily basis.

In the trading session on September 4, Valero stock closed near its Bollinger Band midrange level of $76.30. This value indicates that the stock is neither oversold nor overbought.

Revenue and earnings expansion

Valero reported adjusted EPS of $7.37 on revenue of $117.03 billion in 2018. Analysts expect Valero’s sales to fall 10.9% YoY (year-over-year) to $104.30 billion in 2019 but to rise 8.8% YoY to $113.51 billion in 2020.

The company’s adjusted earnings per share are expected to fall 28.5% to $5.27 in 2019 but to rise 83.7% to $9.68 in 2020. Its adjusted earnings per share are expected to rise at a compound annual growth rate of 4.4% over the next five years.

For both 2019 and 2020, the company expects its capital expenditures to be around $2.5 billion, which includes $1.5 billion in sustaining projects and $1.0 billion in growth projects.

Valero reported adjusted EPS of $1.51 in the second quarter, a decline of 29.8% on a year-over-year basis. In the second quarter of 2018, the company reported adjusted EPS of $2.15. VLO’s Q2 2019 adjusted EPS beat the Wall Street estimate of $1.37.

Valero reported revenues of $28.93 billion in the second quarter, which implies a 6.7% YoY reduction. In the second quarter of 2018, the company reported revenues of $31.02 billion. However, the company’s revenues beat analysts’ estimate of $24.51 billion in Q2 2019.

To learn more about Valero Energy’s second-quarter performance, check out Valero’s Earnings Fall but Beat the Estimate.

More From Market Realist