Valero Energy (VLO) vs. Chevron (CVX) Head to Head Survey

Valero Energy (NYSE: VLO) and Chevron (NYSE:CVX) are both large-cap oils/energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, analyst recommendations and risk.

Dividends

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Valero Energy pays an annual dividend of $3.20 per share and has a dividend yield of 3.4%. Chevron pays an annual dividend of $4.48 per share and has a dividend yield of 3.9%. Valero Energy pays out 64.5% of its earnings in the form of a dividend. Chevron pays out 121.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Valero Energy has raised its dividend for 7 consecutive years and Chevron has raised its dividend for 32 consecutive years. Chevron is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Valero Energy and Chevron’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Valero Energy 4.33% 10.30% 4.63%
Chevron 6.49% 5.22% 3.02%

Earnings and Valuation

This table compares Valero Energy and Chevron’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Valero Energy $93.98 billion 0.44 $4.07 billion $4.96 19.19
Chevron $141.72 billion 1.55 $9.20 billion $3.70 31.02

Chevron has higher revenue and earnings than Valero Energy. Valero Energy is trading at a lower price-to-earnings ratio than Chevron, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

80.9% of Valero Energy shares are held by institutional investors. Comparatively, 65.0% of Chevron shares are held by institutional investors. 0.5% of Valero Energy shares are held by insiders. Comparatively, 0.4% of Chevron shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Valero Energy and Chevron, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Valero Energy 0 10 8 0 2.44
Chevron 1 4 17 0 2.73

Valero Energy currently has a consensus target price of $94.80, suggesting a potential downside of 0.40%. Chevron has a consensus target price of $131.06, suggesting a potential upside of 14.20%. Given Chevron’s stronger consensus rating and higher probable upside, analysts plainly believe Chevron is more favorable than Valero Energy.

Risk & Volatility

Valero Energy has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Chevron has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Summary

Chevron beats Valero Energy on 11 of the 17 factors compared between the two stocks.

About Valero Energy

Valero Energy Corporation (Valero) is an independent petroleum refiner and ethanol producer. The Company’s segments include refining, ethanol and Valero Energy Partners LP (VLP). The refining segment includes its refining operations and the associated marketing activities. The ethanol segment includes its ethanol operations and the associated marketing activities, and logistics assets that support its ethanol operations. The Company owns logistics assets (crude oil pipelines, refined petroleum product pipelines, terminals, tanks, marine docks, truck rack bays and other assets) that support its refining operations. Some of these assets are owned by VLP, which is a midstream master limited partnership owned by the Company. VLP’s assets include crude oil and refined petroleum products pipeline and terminal systems in the United States Gulf Coast and the United States Mid-Continent regions. Its refineries produce conventional gasolines, premium gasolines and lubricants, among others.

About Chevron

Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; processing, transporting, storage and marketing of natural gas, and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products, and manufacturing and marketing of commodity petrochemicals.

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