ExxonMobil Vs. Valero: Which Oil Stock Has A Stronger Bull Case?

Zinger Key Points
  • Valero is expecting its Diamond Green Diesel joint venture to increase its renewable diesel supply by 1.2 billion gallons.
  • ExxonMobil has increased its share buyback program to $30 billion through 2023.

Since Friday, June 24, crude oil prices per barrel have rallied 5.7%, after President Joe Biden proposed a three-month federal gas tax holiday. According to Tuesday data from the American Automobile Association (AAA), national gas prices have declined to $4.881 a gallon, down from its recent peak of $5.016 a gallon.

As refineries trudge to bring capacity back to 100%, sustained crude oil prices over $100 per barrel will allow oil companies to rake in record revenues as gas prices remain elevated.

Valero Energy Corp VLO shares were up 3.60% to $116.25 on Tuesday. The company has enjoyed a 52% year-to-date return, and the consensus projects second quarter earrings to be $6.50 a share, as reported by Fidelity. As of the first quarter 2022, Valero has a debt to equity ratio of 2.1 and an interest coverage ratio of 12.7.

According to Benzinga Pro data, Valero has a favorable price to earnings growth ratio of 0.32, while less than 1 can represent an undervalued opportunity. Nevertheless, Valero is also offering a generous dividend yield at 3.49%, and the highest price target for Valero in 2022 is $166 a share.

Valero has stated that it is the world's largest independent refinery currently operating 15 refineries in the U.S., Canada and the U.K. According to Valero’s first quarter earnings report, its refinery segment averaged 2.8 million barrels of oil per day, while its ethanol segment reached 4 million gallons per day, and its renewable diesel segment averaged 1.7 million gallons per day.

According to the quarterly report, Valero is expecting its Diamond Green Diesel joint venture to increase its renewable diesel supply by 1.2 billion gallons. The company stated that $545 million was returned to shareholders, while $144 million was in share buybacks.

Not to mention, Valero has been vigorously reducing long-term debt by $2 billion in the second half of 2021, as mentioned in the quarterly report.

Also Read: Oil Stocks Drop As Biden Pushes For Gas Tax Holiday

Exxon Mobil Corp XOM shares were up 2.73% to $91.50 on Tuesday. ExxonMobil has experienced a 49% year-to-date return, and the consensus estimate analysts are projecting second quarter earnings to be $3.02 a share, as reported by Fidelity. As of the first quarter 2022, ExxonMobil has a debt to equity ratio of 1.05 and an interest coverage ratio of 79.6.

Benzinga Pro data shows that ExxonMobil does not have a favorable price to earnings growth ratio as it is 1.69, while more than 1 can represent an overvalued position. Exxon is also offering a generous dividend yield at 3.95%.

As of 2021, ExxonMobil was producing 4.6 million barrels of oil per day and is one of the largest manufacturers of natural gas and specialty chemicals in the world.

In the first quarter 2022 report, the company claimed an increase in its recoverable resources to 11 billion-equivalent barrels. The quarterly report mentioned that shareholder distributions reached $5.8 billion, and its share buyback program has been increased to $30 billion through 2023.

According to Benzinga Pro, the highest price target for ExxonMobil in 2022 is $125 a share.

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Posted In: GovernmentLarge CapNewsRegulationsDividendsPrice TargetCommoditiesBuybacksMarketsAnalyst Ratingscrude oil pricesExxonMobilPresident BidenValero Energy Corp
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