Valero Energy Corporation (NYSE: VLO) and Suburban Propane Partners, L.P. (NYSE:SPH) are both oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Dividends

Valero Energy Corporation pays an annual dividend of $2.80 per share and has a dividend yield of 3.8%. Suburban Propane Partners, L.P. pays an annual dividend of $3.55 per share and has a dividend yield of 14.6%. Valero Energy Corporation pays out 69.1% of its earnings in the form of a dividend. Suburban Propane Partners, L.P. pays out 788.9% 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 has raised its dividend for 2 consecutive years and Suburban Propane Partners, L.P. has raised its dividend for 6 consecutive years. Suburban Propane Partners, L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Valero Energy Corporation and Suburban Propane Partners, L.P.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Valero Energy Corporation $79.10 billion 0.41 $4.86 billion $4.05 18.34
Suburban Propane Partners, L.P. $1.15 billion 1.29 $229.21 million $0.45 54.09

Valero Energy Corporation has higher revenue and earnings than Suburban Propane Partners, L.P.. Valero Energy Corporation is trading at a lower price-to-earnings ratio than Suburban Propane Partners, L.P., indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

80.7% of Valero Energy Corporation shares are held by institutional investors. Comparatively, 25.6% of Suburban Propane Partners, L.P. shares are held by institutional investors. 0.5% of Valero Energy Corporation shares are held by insiders. Comparatively, 0.6% of Suburban Propane Partners, L.P. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Valero Energy Corporation has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Suburban Propane Partners, L.P. has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Profitability

This table compares Valero Energy Corporation and Suburban Propane Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Valero Energy Corporation 2.17% 8.59% 3.88%
Suburban Propane Partners, L.P. 2.46% 4.09% 1.25%

Analyst Ratings

This is a breakdown of recent ratings for Valero Energy Corporation and Suburban Propane Partners, L.P., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Valero Energy Corporation 0 7 9 0 2.56
Suburban Propane Partners, L.P. 1 1 1 0 2.00

Valero Energy Corporation currently has a consensus target price of $73.00, indicating a potential downside of 1.74%. Suburban Propane Partners, L.P. has a consensus target price of $27.33, indicating a potential upside of 12.30%. Given Suburban Propane Partners, L.P.’s higher probable upside, analysts plainly believe Suburban Propane Partners, L.P. is more favorable than Valero Energy Corporation.

Summary

Valero Energy Corporation beats Suburban Propane Partners, L.P. on 10 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.

Suburban Propane Partners, L.P. Company Profile

Suburban Propane Partners, L.P. is a marketer and distributor of a range of products. The Company specializes in the distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. The Company’s segments include Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. In support of its marketing and distribution operations, the Company installs and services a range of home comfort equipment, particularly in the areas of heating and ventilation. The Company conducts its business through Suburban Propane, L.P., which operates its propane business and assets (the Operating Partnership), and its direct and indirect subsidiaries. As of September 24, 2016, it had sold approximately 414.8 million gallons of propane and 30.9 million gallons of fuel oil and refined fuels to retail customers. The Company owns and operates a propane storage facility in Elk Grove, California.

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