NEW YORK (TheStreet) -- Valero Energy Corp. (VLO - Get Report) has been improving since its August low. Prices have made higher lows and higher highs -- the simple definition of an uptrend. The On-Balance-Volume line is rising and prices have swung back and forth around the 50-day Moving Average.
In this chart above, we can see a long uptrend for VLO interrupted by lengthy corrections. The OBV line is positive and the Moving Average Convergence Divergence oscillator is poised for a new buy signal with a crossover above zero. VLO could rally into the mid-$70s in the next couple of months.
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:
- Powered by its strong earnings growth of 39.50% and other important driving factors, this stock has surged by 28.14% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, VLO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- VALERO ENERGY CORP has improved earnings per share by 39.5% 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 ($8.51 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 30.0% when compared to the same quarter one year prior, rising from $1,059.00 million to $1,377.00 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.
- 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, 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