Morningstar Rating

Stock Research and Analysis

by Allen Good, CFA

Bulls Say

Valero's refineries have the capability to process cheap, heavy crude oil. The firm will continue to exploit the discount to light crude and deliver competitive margins.
Pipeline projects under construction will provide additional heavy crude oil and domestic light crude supply to refiners on the Gulf Coast, like Valero.
We expect an oversupply of light crude to develop in the Gulf Coast, which should result in sustainable, long-term light discount feedstock for Valero's refineries. Read more 

Bears Say

Refiners may not be able to export as much refined product as necessary to balance the U.S. market, as a result, domestic product margins could weaken and offset the benefit of crude differentials.
Valero is expected to benefit from light crude differentials on the Gulf Coast. If those differentials do not materialize, margins would likely be narrower than expected.
Refining capacity in Asia and the Middle East is growing rapidly, if a demand does not materialize to absorb the extra production, it could depress global product prices, negating Valero's export advantage. Read more 

Management

Joe Gorder replaced long-time CEO William Klesse on May 1. Klesse had been CEO since the end of 2005 and chairman since January 2007. He will remain chairman. Gorder is a 27-year veteran of Valero and its predecessor and has held a number of senior   Read more 

Profile

Valero Energy is the largest independent refiner in the United States. It operates 14 refineries with a total throughput capacity of 2.8 million barrels a day in the U.S.  Read more 

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