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If You Invested $1000 in Valero Energy a Decade Ago, This is How Much It'd Be Worth Now

Zacks Equity Research
·4 min read

How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Valero Energy (VLO) ten years ago? It may not have been easy to hold on to VLO for all that time, but if you did, how much would your investment be worth today?

Valero Energy's Business In-Depth

With that in mind, let's take a look at Valero Energy's main business drivers.

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San Antonio, TX-based Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the United States. The company was founded in 1980. It has a refining capacity of 3.1 million barrels per day across 15 refineries located throughout the United States, Canada and the United Kingdom.

Moreover, Valero is a leading ethanol producer with 14 ethanol plants in the Midwest that have a combined capacity of 1.73 billion gallons per year. The products of the company are sold in the markets of the United States, Canada, the United Kingdom, Ireland and Latin America. The company’s brand names are carried by around 7,000 outlets.

The company organizes its business through three reportable segments, namely, Refining, Ethanol and Renewable Diesel.

Refining: The Refining segment was responsible for 81.7% of the total margin in 2021. It includes refining operations, wholesale marketing, product supply and distribution, and transportation operations. This segment is segregated geographically into the Gulf Coast, mid-continent, West Coast and Northeast regions.

Ethanol: The Ethanol segment includes sales of internally produced ethanol and distillers grains. Operations of this segment are geographically located in the Central Plains region of the United States. This segment was responsible for 10.3% of the total margin in 2021.

Renewable Diesel: In the first quarter of 2019, the company created this segment. The Renewable Diesel segment incorporates the operations of a consolidated joint venture, Diamond Green Diesel. Notably, the renewable diesel plant is North America’s largest biomass-based diesel plant and it is located in Norco, LA. The segment provided 8% of the total margin in 2021, which was supported by the expansion of the Diamond Green Diesel plant.

Bottom Line

Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Valero Energy a decade ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in May 2012 would be worth $5,615.28, or a gain of 461.53%, as of May 25, 2022, according to our calculations. This return excludes dividends but includes price appreciation.

In comparison, the S&P 500 gained 198.44% and the price of gold went up 15.01% over the same time frame.

Analysts are anticipating more upside for VLO.

Among all the independent refiners, Valero offers the most diversified refinery base with a capacity of 3.2 million barrels per day in its 15 refineries located throughout the United States, Canada and the Caribbean. The company’s Gulf coast presence helped it to expand export volumes over the past years and gain from high distillate margins. Also, it is expected to capitalize on the increasing demand for distillate fuel. Valero recently strong first-quarter results owing to increased refinery throughput volumes and a higher refining margin. However, high debt level can affect its financial flexibility. Valero has been constantly bearing the brunt of increasing expenses, adversely affecting the income. Also, uncertainty in the refining business is making the company’s near-term outlook gloomy. As such, the stock warrants a cautious stance.

Over the past four weeks, shares have rallied 18.14%, and there have been 6 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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