NEW YORK (TheStreet) -- Valero Energy (VLO) - Get Report stock is up by 1.1% to $61.40 in afternoon trading on Tuesday, on higher oil prices ahead of the release of U.S. crude inventory data on Wednesday.
WTI crude is rising 1.43% to $44.63 per barrel, while Brent crude is increasing 0.5% to $46.60 per barrel, according to the CNBC.com index.
The U.S. Energy Information Administration is expected to report no change in U.S. stockpiles on Wednesday, Reuters reports.
The EIA has forecast a decline in output in October, making it the sixth consecutive month of declines, while the Organization of Petroleum Exporting Countries also expects non-OPEC countries to reduce production by 2016.
"The market remains oversupplied, but the pace of stock builds is moderating," an Energy Aspects report says, Reuters added. "The Asian demand outlook is not rosy but it is not collapsing either."
Separately, TheStreet Ratings team rates VALERO ENERGY CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALERO ENERGY CORP (VLO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- VALERO ENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VALERO ENERGY CORP increased its bottom line by earning $6.98 versus $4.97 in the prior year. This year, the market expects an improvement in earnings ($8.18 versus $6.98).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 129.8% when compared to the same quarter one year prior, rising from $588.00 million to $1,351.00 million.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, VALERO ENERGY CORP's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: VLO Ratings Report