Valero Energy Corporation (NYSE: VLO) and Cosan Limited (NYSE:CZZ) are both mid-cap oil & gas refining and marketing – nec companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.
Insider and Institutional Ownership
80.8% of Valero Energy Corporation shares are held by institutional investors. Comparatively, 42.4% of Cosan Limited shares are held by institutional investors. 0.5% of Valero Energy Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This is a breakdown of recent ratings and recommmendations for Valero Energy Corporation and Cosan Limited, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Valero Energy Corporation||0||10||9||0||2.47|
Valero Energy Corporation presently has a consensus target price of $79.06, indicating a potential downside of 4.61%. Given Valero Energy Corporation’s higher possible upside, analysts clearly believe Valero Energy Corporation is more favorable than Cosan Limited.
Volatility and Risk
Valero Energy Corporation has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Cosan Limited has a beta of 2.35, indicating that its stock price is 135% more volatile than the S&P 500.
Valuation & Earnings
This table compares Valero Energy Corporation and Cosan Limited’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Valero Energy Corporation||$75.66 billion||0.48||$2.29 billion||$4.61||17.98|
|Cosan Limited||$3.59 billion||0.39||$79.64 million||$0.31||27.06|
Valero Energy Corporation has higher revenue and earnings than Cosan Limited. Valero Energy Corporation is trading at a lower price-to-earnings ratio than Cosan Limited, indicating that it is currently the more affordable of the two stocks.
This table compares Valero Energy Corporation and Cosan Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Valero Energy Corporation||2.33%||9.87%||4.43%|
Valero Energy Corporation pays an annual dividend of $2.80 per share and has a dividend yield of 3.4%. Cosan Limited pays an annual dividend of $0.08 per share and has a dividend yield of 1.0%. Valero Energy Corporation pays out 60.7% of its earnings in the form of a dividend. Cosan Limited pays out 25.8% 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.
Valero Energy Corporation beats Cosan Limited on 14 of the 17 factors compared between the two stocks.
Valero Energy Corporation Company Profile
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.
Cosan Limited Company Profile
Cosan Limited (Cosan) is a holding company. The Company’s segments include Raizen Energia, Raizen Combustiveis, COMGAS, Cosan Logistica, Lubricants and Other business. The Company’s other business include other investments, in addition to the corporate activities. The Company offers Logistics services, including transportation, port loading and storage of sugar, leasing or lending of locomotives, wagons and other railway equipment, through its subsidiaries Rumo Logistica Operadora Multimodal S.A. (Rumo), logistic segment (Logistic). The Company is also engaged in production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (Moove) and Comma Oil & Chemicals Ltd. (Comma), under the Mobil licensed trademark in Brazil, Bolivia, Uruguay and Paraguay, in addition to the European and Asian market using the Comma brand and corporate activities (Lubricants).
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