TXO Partners (NYSE:TXO – Get Free Report) and Valero Energy (NYSE:VLO – Get Free Report) are both energy companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.
Analyst Ratings
This is a breakdown of current ratings and price targets for TXO Partners and Valero Energy, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| TXO Partners | 1 | 0 | 2 | 2 | 3.00 |
| Valero Energy | 1 | 8 | 9 | 2 | 2.60 |
TXO Partners presently has a consensus target price of $19.00, suggesting a potential upside of 34.18%. Valero Energy has a consensus target price of $382.62, suggesting a potential downside of 12.04%. Given TXO Partners’ stronger consensus rating and higher possible upside, analysts plainly believe TXO Partners is more favorable than Valero Energy.
Profitability
This table compares TXO Partners and Valero Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| TXO Partners | -9.23% | -5.59% | -2.83% |
| Valero Energy | 5.17% | 26.74% | 11.92% |
Risk and Volatility
TXO Partners has a beta of 0.08, indicating that its share price is 92% less volatile than the S&P 500. Comparatively, Valero Energy has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500.
Insider and Institutional Ownership
27.4% of TXO Partners shares are held by institutional investors. Comparatively, 78.7% of Valero Energy shares are held by institutional investors. 0.4% of Valero Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares TXO Partners and Valero Energy”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| TXO Partners | $401.01 million | 1.96 | -$21.62 million | ($0.77) | -18.39 |
| Valero Energy | $122.69 billion | 1.02 | $2.35 billion | $24.10 | 18.05 |
Valero Energy has higher revenue and earnings than TXO Partners. TXO Partners is trading at a lower price-to-earnings ratio than Valero Energy, indicating that it is currently the more affordable of the two stocks.
Dividends
TXO Partners pays an annual dividend of $1.60 per share and has a dividend yield of 11.3%. Valero Energy pays an annual dividend of $4.80 per share and has a dividend yield of 1.1%. TXO Partners pays out -207.8% of its earnings in the form of a dividend. Valero Energy pays out 19.9% 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. TXO Partners has raised its dividend for 1 consecutive years and Valero Energy has raised its dividend for 4 consecutive years. TXO Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Valero Energy beats TXO Partners on 12 of the 17 factors compared between the two stocks.
About TXO Partners
TXO Partners, L.P., an oil and natural gas company, focuses on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The company was formerly known as TXO Energy Partners, L.P. and changed its name to TXO Partners, L.P. in May 2023. TXO Partners, L.P. was incorporated in 2012 and is based in Fort Worth, Texas.
About Valero Energy
Valero Energy Corporation manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, Mexico, Peru, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, heating oil, and asphalt; feedstocks; aromatics; sulfur and residual fuel oil; intermediate oils; and sulfur, sweet, and sour crude oils. It sells its refined products through wholesale rack and bulk markets; and through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company owns and operates renewable diesel and ethanol plants, as well as produces renewable diesel and naphtha under the Diamond Green Diesel brand name. In addition, it offers ethanol and various co-products, including dry distiller grains, syrup, and inedible distillers corn oil to animal feed customers. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.
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