NYSE:VLO is a prime example of a stock that offers more than what meets the eye in terms of fundamentals.

Our stock screener has spotted VALERO ENERGY CORP (NYSE:VLO) as an undervalued stock with solid fundamentals. NYSE:VLO shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Understanding NYSE:VLO's Valuation Score

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NYSE:VLO boasts a 7 out of 10:

• A Price/Earnings ratio of 4.17 indicates a rather cheap valuation of VLO.
• 83.94% of the companies in the same industry are more expensive than VLO, based on the Price/Earnings ratio.
• VLO is valuated cheaply when we compare the Price/Earnings ratio to 24.48, which is the current average of the S&P500 Index.
• The Price/Forward Earnings ratio is 7.99, which indicates a rather cheap valuation of VLO.
• 67.43% of the companies in the same industry are more expensive than VLO, based on the Price/Forward Earnings ratio.
• When comparing the Price/Forward Earnings ratio of VLO to the average of the S&P500 Index (18.10), we can say VLO is valued rather cheaply.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of VLO indicates a rather cheap valuation: VLO is cheaper than 83.94% of the companies listed in the same industry.
• 87.61% of the companies in the same industry are more expensive than VLO, based on the Price/Free Cash Flow ratio.

How do we evaluate the Profitability for NYSE:VLO?

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:VLO was assigned a score of 5 for profitability:

• VLO has a Return On Assets of 16.95%. This is in the better half of the industry: VLO outperforms 70.64% of its industry peers.
• Looking at the Return On Equity, with a value of 41.23%, VLO is in the better half of the industry, outperforming 78.90% of the companies in the same industry.
• The Return On Invested Capital of VLO (25.90%) is better than 84.86% of its industry peers.
• In the last couple of years the Profit Margin of VLO has grown nicely.
• VLO's Operating Margin has improved in the last couple of years.
• In the last couple of years the Gross Margin of VLO has grown nicely.

ChartMill's Evaluation of Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:VLO has earned a 8 out of 10:

• VLO has an Altman-Z score of 5.02. This indicates that VLO is financially healthy and has little risk of bankruptcy at the moment.
• VLO has a better Altman-Z score (5.02) than 89.45% of its industry peers.
• VLO has a debt to FCF ratio of 1.04. This is a very positive value and a sign of high solvency as it would only need 1.04 years to pay back of all of its debts.
• Looking at the Debt to FCF ratio, with a value of 1.04, VLO belongs to the top of the industry, outperforming 81.19% of the companies in the same industry.
• A Debt/Equity ratio of 0.39 indicates that VLO is not too dependend on debt financing.
• Looking at the Current ratio, with a value of 1.51, VLO is in the better half of the industry, outperforming 67.43% of the companies in the same industry.

Analyzing Growth Metrics

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:VLO, the assigned 4 reflects its growth potential:

• The Earnings Per Share has grown by an impressive 27.14% over the past year.
• VLO shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 42.51% yearly.
• Measured over the past years, VLO shows a quite strong growth in Revenue. The Revenue has been growing by 13.42% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of VLO for a complete fundamental analysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.