VLO - Valero Energy Corporation (NYSE Stock)

[BadThad]

Trading near it's all time low, I believe VLO to be a bargain right now. It PPS seems to somewhat inversely follow the price of oil, since they use a lot of it....but, the company is doing better than ever.

$47.80 Low 1/23/08
$78.68 High 7/10/07

VLO on Google Finance

Chart

I'm looking to enter this one soon, as soon as this run-down halts, I'm in for a long hold.

Today's Price: $54.90

[BadThad]

Some recent news:

3/5/2008 11:02:52 AM Valero Energy (VLO) dropped on Wednesday and reached a five-week low. The stock started to drop at around 10 a.m. ET and saw weakness through the hour on increasing volume. Shares are at $54.37, down $2.30 on the session. The stock has been trending lower for about a week.

Valero Board Approves $3 Billion Share Buyback and $2.4 Billion Port Arthur Refinery Expansion Project
4:17p ET February 28, 2008 (Business Wire)
Valero Energy Corporation (NYSE: VLO) announced today that its board of directors has approved a new $3 billion share repurchase authorization. Valero purchased $5.8 billion worth of its stock in 2007 and has $1 billion remaining under a previously announced buyback authorization, giving it $4 billion available for stock repurchases going forward.

The board also approved the company's largest-ever capital investment project - an expansion at its refinery in Port Arthur, Texas that will involve the construction of a 50,000 barrel-per-day hydrocracker, a 45,000 barrel-per-day coker, and revamps and expansions of numerous other units. The project's $2.4 billion cost includes interest and overhead. The expansion is expected to boost the refinery's overall throughput capacity to 415,000 barrels per day, making it one of the country's largest refineries and giving Valero more capacity to process heavy, sour feedstocks that trade at discounts to light sweet crude oil. The hydrocracker project is expected to be finished in the fourth quarter of 2010 and the coker project is expected to be finished in the second quarter of 2011.

"As with the St. Charles expansion project that we announced last year, the Port Arthur expansion project emphasizes ultra low sulfur diesel production - reflecting the significant projected growth in demand for diesel both in the U.S. and around the world," said Bill Klesse, Chairman of the Board and Chief Executive Officer of Valero Energy Corporation. "The Port Arthur and St. Charles expansion projects signal major investments in Valero's internal growth strategy, and coupled with the stock buyback program, is part of our continued effort to maximize shareholder value by taking a balanced approach to allocating our cash flow."

[BadThad]

Earnings will be lower than predicted:

Valero warns on profit over costs for raw materials, refineries
10:19a ET March 25, 2008 (MarketWatch)
NEW YORK (MarketWatch) -- Valero Energy Corp. shares rose from losses in pre-market trades Tuesday despite the gasoline producer's warning that it would miss its first-quarter earnings target because of rising prices for raw materials and unexpected costs incurred at its refineries.

With oil spiking above $100 a barrel, Wall Street has been expecting lower profits from refiners as the price of crude outpaces the retail price of gasoline at the pump.

Analysts have already trimmed back on their first-quarter profit outlooks for San Antonio-based Valero to a consensus estimate of 69 cents a share, down from $1.08 a share a month ago, according to a survey by Thomson Financial.

Yet, Valero's update profit issued late Monday indicates it will come in well below the latest estimates, with earnings for the first three months of the year now pegged at 10 to 35 cents a share. The company will release full financial results for the first quarter on April 29.

The refiner said it expects profit margins on gasoline, petroleum coke, residual fuel oil, and petrochemicals "to be significantly lower" than in the year-ago first quarter.

Valero also cited $400 million in costs tied to "operating and equipment issues" at refineries in Port Arthur, Texas, as well as Delaware City, Delaware, and Aruba.

"While shares of Valero will likely see some downside pressure this morning following its reduced guidance, if the company can correct its operational issues, it could stand to benefit heading into the demand-heavy summer driving season," said Brian Niemiec of Susquehanna Financial. "Crude oil prices remain stable near $101 this morning, but if prices trend down further below $100 or close to $90 while gasoline prices remain elevated, Valero, in particular, could outperform as margins begin to expand."

Shares of Valero dropped 46 cents, or 0.8%, to $49.62. Earlier, the stock fell about 3% in pre-market trades.

So far this year, Valero's stock has fallen to the $50 level from $70.

[BadThad]

With oil moving so high, time to reboot this old VLO thread. The PPS is highly depressed, I'm going to dig to find out why as I haven't followed this stock in a long time. Some news today:

Valero selling refinery in deal worth up to $433 mln
9:21a ET May 8, 2008 (MarketWatch)
NEW YORK (MarketWatch) -- Valero Energy Corp. on Thursday said it's selling its 85,000 barrel-per-day refinery in Krotz Spring, La. to Alon USA Energy Inc. in a deal worth up to $433 million. The price includes $333 million plus an earn-out provision value at more than $100 million. "This transaction is consistent with our strategy to concentrate on our core refineries where we see higher returns for the long run," Valero said. Valero reiterated plans to possibly sell refineries in Aruba, Memphis, Tennessee and Ardmore, Oklahoma. J.P. Morgan Securities Inc. acted as exclusive financial adviser to Valero on the Krotz Springs transaction.

[BadThad]

Looks like the high price of crude actually hurts them as a refiner (cost of raw materials):

On April 29, 2008, Valero Energy Corp. (VLO) said its Q1 FY08 net income declined 77.2%, weighted down by lower margins in refined products, due to surge in crude oil prices, higher energy costs, and maintenance expenses. Net income fell to $261.00 million or $0.49 per share from $1.14 billion or $1.91 per share in Q1 FY07. Income from continuing operations included a charge of $0.12 per share, for business interruption insurance
recovery, related to the fire at the company's McKee refinery. Excluding this, earnings from continuing operations beat the most recent consensus forecast of $0.29 per share.

At the end of Q1 FY08, operating revenue rose 49.0% to $27.95 billion from $18.78 billion a year ago. In Refining, operating costs per barrel increased 22.8% to $6.09 per barrel, whereas throughput margin per barrel decreased 30.2% to $8.48. Besides, total throughput volumes slipped to 2,609 million barrels (Mbbls) per day from 2,747 Mbbls per day. In addition, Feedstock differential, the discount to WTI for Maya crude oil averaged $16.81 per barrel, while the discount for Mars medium sour crude oil averaged $6.97 per barrel. Geographically, operating income from the Gulf Coast declined 59.6% to $437.00 million, hurt by lower throughput volumes and margins. Operating income from the Mid-continent rose 26.4% to $115.00 million. The Northeast region's operating income shrunk to $5.00 million from $289.00 million and the West Coast region posted a decline of 96.5% to $11.00 million in operating income.

Looking ahead to Q2 FY08, Valero anticipates average throughput rates for the Gulf Coast should increase by approximately 100,000 barrels per day as the company completed the repairs on the coker drums at its Port Arthur refinery and the vacuum tower at VLO Aruba refinery in May.

Strong top-line growth. The largest North American refiner Valero Energy’s Q4 FY07 revenue increased 52.8% to $28.48 billion, driven by strong performance in both the Refining and the Retail segments. Revenue from the Refining segment surged 55.1% to $26.31 million, fueled by record total throughput volumes at 2,806 Mbbls per day. In addition, the Retail segment’s revenue ascended 26.2% to $2.36 billion.

Healthy cash position and leverage levels. During the quarter under review, Valero’s cash and cash equivalent balance increased 53.9% to $2.50 billion from $1.62 billion in prior year quarter. Furthermore, an increase in the company’s debt balances and a decrease in stockholders’ equity pushed the debt-to-equity ratio up to 0.37 from 0.28. Despite the increase, the company’s leverage levels remained relatively low, which shows the company’s prudent debt management.

Key strategies. The company is planning to dispose its Aruba refinery in Q2 FY08 and anticipates selling some other refineries including Memphis and Kurtz Springs refineries in order to cut down its portfolio and achieve
operational efficiency. In addition, Valero Energy won a $30.30 million contract from Defense Logistics Agency to supply diesel fuel and gasoline. Besides, VLO received approval for the expansion of its refinery in
Port Arthur, Texas for $2.40 billion. The expansion is expected to enhance the refinery’s throughput capacity to 415,000 barrels per day, making it one of the largest refineries of the country.

Positive outlook. The company anticipates improvements in gasoline margins during FY08. In addition, Valero expects to incur approximately $4.50 billion for capital investments, of which $575.00 million is for environmental projects and approximately $400.00 million for deferred turnaround and catalyst costs.
Risks to the BUY rating. The company’s future prospects depend on the crude oil prices. Any unfavorable movements in the crude prices could have a negative effect on the company’s earnings. Furthermore, declining margins and a shrinking throughput margin per barrel are the causes of concern for the company.

[BadThad]

I'm going back to playing this stock. I've made a lot of money off it in the past and it hit a new low 09MAY2008 and seems poised for a come back. The 3 mo RSI is just started to cross back over 50. It's broken thur both the 9 and 20 SMA's and it's WELL below the 200MA of about $61.

Current Price: $48.79

[BadThad]

EOD at 49.56! Looks like some other investors saw what I did....I see another $1 rise tomorrow too. Next stop....the 200 SMA!

[BadThad]

VLO continues it's bullish trend today. I believe this stock to be highly under-valued at a P/E of only 7.4.

Last night saw Tesoro's CEO on TV, he feels his companies stock is also highly under-valued. (Tesoro is the largest refiner on the west coast.)

TSO on Google Finanace

He said the price of oil really doesn't matter becasue their margins are now consistent. This conficts with the last quarterly statement.....I dunno what the game is here. He claims they have huge oil reserves and his company will improve it's profit this year.

[BadThad]

Woooohoooo....up 5% so far, making for a nice looking chart. Look how far the PPS is below the 200MA:

VLO - SharpCharts from StockCharts.com

[Grizzums]

Originally Posted by BadThad

Woooohoooo....up 5% so far, making for a nice looking chart. Look how far the PPS is below the 200MA:

VLO - SharpCharts from StockCharts.com

Nice....