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Valero Energy Corporation (VLO)

Company Dividend Discount ModelIndustry: Oil & Gas Refining & MarketingSector: Energy

Valuation Snapshot

Stable Growth$46.12 - $71.51$57.88
Multi-Stage$67.49 - $73.67$70.53
Blended Fair Value$64.20
Current Price$170.26
Upside-62.29%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-1.49%9.59%4.434.644.995.125.124.774.383.973.552.71
YoY Growth---4.68%-7.04%-2.50%0.13%7.24%8.98%10.23%11.79%31.01%53.07%
Dividend Yield--3.35%2.69%3.58%5.04%7.15%10.52%5.06%4.28%5.36%4.23%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,495.00
(-) Cash Dividends Paid (M)1,400.00
(=) Cash Retained (M)95.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)299.00186.88112.13
Cash Retained (M)95.0095.0095.00
(-) Cash Required (M)-299.00-186.88-112.13
(=) Excess Retained (M)-204.00-91.88-17.13
(/) Shares Outstanding (M)312.75312.75312.75
(=) Excess Retained per Share-0.65-0.29-0.05
LTM Dividend per Share4.484.484.48
(+) Excess Retained per Share-0.65-0.29-0.05
(=) Adjusted Dividend3.824.184.42
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate0.75%1.75%2.75%
Fair Value$46.12$57.88$71.51
Upside / Downside-72.91%-66.01%-58.00%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,495.001,521.091,547.631,574.641,602.121,630.081,678.98
Payout Ratio93.65%92.92%92.19%91.46%90.73%90.00%92.50%
Projected Dividends (M)1,400.001,413.341,426.721,440.141,453.591,467.071,553.06

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate0.75%1.75%2.75%
Year 1 PV (M)1,282.751,295.481,308.21
Year 2 PV (M)1,175.241,198.691,222.36
Year 3 PV (M)1,076.681,109.061,142.08
Year 4 PV (M)986.321,026.061,067.00
Year 5 PV (M)903.48949.22996.79
PV of Terminal Value (M)15,684.3916,478.4217,304.28
Equity Value (M)21,108.8522,056.9223,040.73
Shares Outstanding (M)312.75312.75312.75
Fair Value$67.49$70.53$73.67
Upside / Downside-60.36%-58.58%-56.73%

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