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4 Reasons That Make Valero Energy (VLP) an Attractive Stock


Earnings estimates for Valero Energy Partners LP VLP have been revised upward over the past 30 days, reflecting analysts’ optimism on the stock. The Zacks Consensus Estimate for 2019 earnings has moved 16.5% north to $3.54 per unit.

Valero Energy is engaged in the ownership, development and acquisition of crude oil and refined petroleum products, pipelines, terminals and other transportation and logistics assets. The company's properties are primarily located in the Gulf Coast and Mid-Continent regions of the United States.

Let’s focus on the factors that make Valero Energy a profitable pick at the moment.

Price Movement

In the past six months, Valero Energy’s units have gained 10.1% versus the industry’s decline of 10.1%.

Earnings Surprise Trend & Estimate Revision

Valero Energy delivered a positive surprise in two of the last four reported quarters, the average beat being 3.70%. Its 2019 earnings estimates moved 19.76% north year over year to $3.54.

Long-Term Growth and Dividend Yield

The partnership’s long-term earnings (3-5 years) growth is pegged at 7%, courtesy of its improvement via organic operations and pursuit of strategic inorganic opportunities. Valero Energy recently announced that it is merging with Valero Energy Corporation VLO and Forest Merger Sub LLC, a subsidiary incorporated in Delaware as a merge vehicle by the company.

Cash Distribution

The partnership continues to deliver valuable returns to its unitholder in the form of regular cash payouts. In second-quarter 2018, the partnership hiked the quarterly distribution rate by 4.5% to 55.1 cents per unit compared with last quarter’s payout of 52.75 cents. The partnership marked its 15th consecutive quarter of cash distribution since fourth-quarter 2014.

Such capital deployment strategy reflects a strong financial position that the company boasts. The current distribution yield of the company is 5.22%, better than the Zacks S&P 500 Composite’s 2.2%.

Zacks Rank & Other Key Picks

Valero Energy currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Other top-ranked stocks in the same sector include Gulfport Energy Corporation GPOR and MPLX LP MPLX, each carrying a Zacks Rank #2 (Buy).

Gulfport Energy delivered a positive surprise of 30.91% in the trailing four reported quarters. The Zacks Consensus Estimate for 2019 earnings moved 2.9% north to $1.42 over the past 60 days.

MPLX came up with a beat of 9.95% in the previous four reported quarters. The Zacks Consensus Estimate for 2019 earnings has been raised 3.2% to $2.60 over the past 60 days.

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