Valero Energy: The Best Operating Margin In The Industry - And Getting Better

Ronald Ferrie
3.3K Followers
(8min)

Summary

  • Refining margins have improved in the second quarter following the closure of three refineries and unexpected downtime at several domestic refineries.
  • VLO is positioned to maintain its industry leading cost per barrel metric despite an elevated maintenance schedule in Q2.
  • Closure of the Benicia refinery is projected to only increase the company's lead over the industry.
  • VLO has maintained its position as the highest margin refiner in 9 of the past 11 years. I expect this trend to continue moving forward.
  • I maintain the company as a BUY rating due to the company's superior performance.

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Thesis

The second quarter is set up for a meaningful rebound in earnings for Valero Energy (NYSE:VLO). The company’s industry leading cost profile gives VLO a leading edge in returning cash to shareholders

This article was written by

3.3K Followers
I am a Licensed Professional Engineer who works in the Nuclear Power industry. I use my professional working knowledge of the power/energy industries to aid in evaluating potential equities worthy of long-term investment. I invest in income producing equities and rental real estate properties for cash flow and long-term appreciation. My articles are to serve as a platform for presenting the underlying fundamentals and long-term potential of each equity/business.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PSX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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