NEW YORK (TheStreet) -- Shares of Valero Energy Corp. (VLO - Get Report) are down by 2.98% to $61.56 in early afternoon trading on Thursday, as some energy related stocks tumble due to the retreat in oil prices.
Crude oil (WTI) is lower by 2.73% to $48.72 per barrel and Brent crude is slipping by 4.01% to $54.81 per barrel this afternoon, according to the CNBC.com index.
Oil prices are slumping today ahead of a news conference scheduled to take place in Switzerland where Iran and some global powers have been in talks regarding the Middle Eastern country's nuclear program, Reuters reports.
Valero Energy is an international manufacturer and marketer of transportation fuels, petrochemical products and power.
If a deal with Tehran was reached it could mean that the talks resulted in the West's agreement to remove some sanctions on Iran, which could increase oil exports out of the country, adding to an already over supplied market.
Reporters in Lausanne, the Swiss city where the negotiations are taking place, were told to move immediately to the site where the news conference will take place, although no specific timeframe for when the address would be given was announced, Reuters added.
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 attractive valuation levels, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, VALERO ENERGY CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 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, despite the company's weak earnings results. 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.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.9%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: VLO Ratings Report