As Valero Energy (VLO) has posted earnings per share of
$1.91 - beating the street estimates by $0.18 - we reiterate our bullish stance
on the stock. VLO is mainly attractive to investors because of its cheap
valuations. It is currently trading at a forward price to earnings of 6x - at a
significant discount when compared to industry average of 7.2x. Its dividend
yield is 2.4 percent, which is greater than its peers' average of 1.9 percent.
In our opinion, Valero's St. Charles and Port Arthur hydrocracker projects are
expected to be completed sometime next year, enabling the company to bring enhancement
in its profitability situation.
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