Critical Comparison: Western Gas Partners, (WES) & Valero Energy Corporation (VLO)
Western Gas Partners, (NYSE: WES) and Valero Energy Corporation (NYSE:VLO) are both mid-cap oils/energy companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.
Insider & Institutional Ownership
59.4% of Western Gas Partners, shares are held by institutional investors. Comparatively, 80.7% of Valero Energy Corporation shares are held by institutional investors. 0.0% of Western Gas Partners, shares are held by insiders. Comparatively, 0.5% of Valero Energy Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a breakdown of current recommendations for Western Gas Partners, and Valero Energy Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Western Gas Partners,||1||4||6||0||2.45|
|Valero Energy Corporation||0||7||10||0||2.59|
Western Gas Partners, presently has a consensus target price of $61.20, indicating a potential upside of 17.08%. Valero Energy Corporation has a consensus target price of $74.21, indicating a potential downside of 4.47%. Given Western Gas Partners,’s higher probable upside, analysts clearly believe Western Gas Partners, is more favorable than Valero Energy Corporation.
Valuation & Earnings
This table compares Western Gas Partners, and Valero Energy Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Western Gas Partners,||$2.03 billion||3.93||$933.45 million||$1.39||37.60|
|Valero Energy Corporation||$79.10 billion||0.43||$4.86 billion||$4.05||19.18|
Valero Energy Corporation has higher revenue and earnings than Western Gas Partners,. Valero Energy Corporation is trading at a lower price-to-earnings ratio than Western Gas Partners,, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Western Gas Partners, has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Valero Energy Corporation has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.
This table compares Western Gas Partners, and Valero Energy Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Western Gas Partners,||28.81%||15.80%||7.66%|
|Valero Energy Corporation||2.17%||8.59%||3.88%|
Western Gas Partners, pays an annual dividend of $3.56 per share and has a dividend yield of 6.8%. Valero Energy Corporation pays an annual dividend of $2.80 per share and has a dividend yield of 3.6%. Western Gas Partners, pays out 256.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Valero Energy Corporation pays out 69.1% of its earnings in the form of a dividend. Western Gas Partners, has raised its dividend for 9 consecutive years and Valero Energy Corporation has raised its dividend for 6 consecutive years. Western Gas Partners, is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valero Energy Corporation beats Western Gas Partners, on 9 of the 17 factors compared between the two stocks.
Western Gas Partners, Company Profile
Western Gas Partners, LP is a master limited partnership (MLP) that acquires, owns, develops and operates midstream energy assets. The Company is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids (NGLs) and crude oil in the United States. The Company provides midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. The Company’s operations and activities are managed by its general partner, which is indirectly controlled by Anadarko through Western Gas Equity Partners, LP (WGP). As of December 31, 2016, its assets and investments consisted of gathering systems, treating facilities, natural gas processing plants/trains, NGL pipelines, natural gas pipelines and oil pipelines. These assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas.
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.
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