Valero Dinged With a Downgrade
By
Dave Mock
June 25, 2008
|
Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track records of the firm behind them -- so individuals can make better investing decisions.
In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 110,000 investors, many of whom demonstrate better investing insight than published analysts do.
Enough top-performing CAPS investors are striking a newly bearish tone on oil refiner Valero Energy (NYSE: VLO) to take it down a notch from its long-held five-star rank to a less-than-stellar four stars. With 3,791 investors giving an opinion on Valero, there's plenty of analysis and commentary explaining the recent decline in sentiment.
Consumers aren’t the only ones getting pinched at the pump; shares of Valero and peers such as Tesoro (NYSE: TSO) and Frontier Oil (NYSE: FTO) have all been feeling the pain of higher oil prices as well. Shares in each have declined more than 35% so far this year, and some analysts are still floating scary projections of $200 oil.
While many consumers falsely believe everyone connected to "Big Oil" must be profiting immensely from gasoline north of $4 a gallon, margins are actually being hit hard for many in the value chain, driving profits down. The competitive environment and grim outlook in the retail fuel market among Valero, Chevron (NYSE: CVX), and BP (NYSE: BP) even led ExxonMobil (NYSE: XOM) to announce its planned withdrawal from this end of the supply chain.
While many pundits expect the economy to get much worse, some investors remain steadfast that Valero's earnings multiple of less than 7 means it is a solid play, even given the near-term pain of record oil prices. However, even with the drop in sentiment in CAPS, nearly 96% of the investors rating Valero expect it to outperform the market going forward.
To see what the very best CAPS analysts are saying now about Valero -- as well as other stocks they are picking and panning -- head on over to CAPS and have a look. The community research and resources in CAPS are totally free, unlike analyst opinions reserved for paying clients.
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