Hess Corporation (HES) and Valero Energy Corporation (VLO) Head-To-Head Analysis

Hess Corporation (NYSE: HES) and Valero Energy Corporation (NYSE:VLO) are both large-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Institutional and Insider Ownership

87.2% of Hess Corporation shares are owned by institutional investors. Comparatively, 80.8% of Valero Energy Corporation shares are owned by institutional investors. 11.8% of Hess Corporation shares are owned by insiders. Comparatively, 0.5% of Valero Energy Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Hess Corporation has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, Valero Energy Corporation has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Dividends

Hess Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 2.4%. Valero Energy Corporation pays an annual dividend of $2.80 per share and has a dividend yield of 3.9%. Hess Corporation pays out -5.2% of its earnings in the form of a dividend. Valero Energy Corporation pays out 69.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Valero Energy Corporation has raised its dividend for 6 consecutive years. Valero Energy Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Hess Corporation and Valero Energy Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hess Corporation 1 10 6 0 2.29
Valero Energy Corporation 0 7 9 0 2.56

Hess Corporation presently has a consensus target price of $52.13, suggesting a potential upside of 23.62%. Valero Energy Corporation has a consensus target price of $72.38, suggesting a potential upside of 1.76%. Given Hess Corporation’s higher possible upside, equities research analysts clearly believe Hess Corporation is more favorable than Valero Energy Corporation.

Earnings & Valuation

This table compares Hess Corporation and Valero Energy Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hess Corporation $4.94 billion 2.71 $1.45 billion ($19.30) -2.18
Valero Energy Corporation $79.10 billion 0.40 $4.86 billion $4.05 17.56

Valero Energy Corporation has higher revenue and earnings than Hess Corporation. Hess Corporation is trading at a lower price-to-earnings ratio than Valero Energy Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Hess Corporation and Valero Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hess Corporation -118.07% -8.49% -4.77%
Valero Energy Corporation 2.17% 8.59% 3.88%

Summary

Valero Energy Corporation beats Hess Corporation on 10 of the 16 factors compared between the two stocks.

About Hess Corporation

Hess Corporation is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas. The Company’s segments include Exploration and Production, and Bakken Midstream. Its Exploration and Production segment explores for, develops, produces, purchases and sells crude oil, NGLs and natural gas with production operations primarily in the United States, Denmark, Equatorial Guinea, the Malaysia/Thailand Joint Development Area (JDA), Malaysia and Norway. The Bakken Midstream segment provides fee-based services, including crude oil and natural gas gathering, processing of natural gas and the fractionation of NGLs, transportation of crude oil by rail car, terminaling and loading crude oil and NGLs, and the storage and terminaling of propane, primarily in the Bakken shale play of North Dakota.

About Valero Energy Corporation

Valero Energy Corporation (Valero) is an independent petroleum refiner and ethanol producer. The Company’s segments include refining, ethanol and Valero Energy Partners LP (VLP). The refining segment includes its refining operations and the associated marketing activities. The ethanol segment includes its ethanol operations and the associated marketing activities, and logistics assets that support its ethanol operations. The Company owns logistics assets (crude oil pipelines, refined petroleum product pipelines, terminals, tanks, marine docks, truck rack bays and other assets) that support its refining operations. Some of these assets are owned by VLP, which is a midstream master limited partnership owned by the Company. VLP’s assets include crude oil and refined petroleum products pipeline and terminal systems in the United States Gulf Coast and the United States Mid-Continent regions. Its refineries produce conventional gasolines, premium gasolines and lubricants, among others.

Receive News & Ratings for Hess Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Hess Corporation and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply