VLO - Valero Energy: Supportive Upside Ahead

2024-06-25 05:38:28 ET

Summary

• Positive outlook for Valero supported by limited global refinery additions, improving margins in renewable diesel, and potential upside from SAF mandates.
• The company is a best-in-class operator with clear benefits from exporting to Europe.
• Valero's valuation suggests potential for further upside, which is also supported by buybacks.

Here at the Lab, we are back to analyzing Valero Energy ( VLO ). As a reminder, the company is an international manufacturer of petroleum-based products and low-carbon liquid transportation fuel. Valero's segments include Refining, Ethanol, and Renewable Diesel, with a JV partner called Diamond Green Diesel , which operates a renewable diesel plant in the US Gulf Coast region. Valero owns 15 petroleum refineries in the US, Canada, and the UK, and it has 3.2 million barrels per day of high-complexity throughput capacity. We still view Valero as a best-in-class operator with significant optionality in its refining system....

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