Valero Energy (NYSE:VLO) and HF Sinclair (NYSE:DINO) Critical Comparison

Valero Energy (NYSE:VLO) and HF Sinclair (NYSE:DINO) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Valero Energy and HF Sinclair, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valero Energy	0	6	9	2	2.76
HF Sinclair	1	6	5	2	2.57

Valero Energy currently has a consensus price target of $168.07, indicating a potential upside of 3.49%. HF Sinclair has a consensus price target of $55.64, indicating a potential upside of 6.34%. Given HF Sinclair’s higher probable upside, analysts plainly believe HF Sinclair is more favorable than Valero Energy.

Risk & Volatility

Valero Energy has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, HF Sinclair has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Valuation & Earnings

This table compares Valero Energy and HF Sinclair”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valero Energy	$123.78 billion	0.41	$2.77 billion	$2.40	67.67
HF Sinclair	$28.58 billion	0.34	$177.00 million	($0.46)	-113.74

Valero Energy has higher revenue and earnings than HF Sinclair. HF Sinclair is trading at a lower price-to-earnings ratio than Valero Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Valero Energy and HF Sinclair’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Valero Energy	0.62%	5.76%	2.62%
HF Sinclair	-0.32%	1.89%	1.06%

Dividends

Valero Energy pays an annual dividend of $4.52 per share and has a dividend yield of 2.8%. HF Sinclair pays an annual dividend of $2.00 per share and has a dividend yield of 3.8%. Valero Energy pays out 188.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HF Sinclair pays out -434.8% of its earnings in the form of a dividend. Valero Energy has increased its dividend for 4 consecutive years and HF Sinclair has increased its dividend for 3 consecutive years. HF Sinclair is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

78.7% of Valero Energy shares are held by institutional investors. Comparatively, 88.3% of HF Sinclair shares are held by institutional investors. 0.0% of Valero Energy shares are held by company insiders. Comparatively, 0.3% of HF Sinclair shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Valero Energy beats HF Sinclair on 12 of the 17 factors compared between the two stocks.

About Valero Energy

Valero Energy Corporation manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, Mexico, Peru, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, heating oil, and asphalt; feedstocks; aromatics; sulfur and residual fuel oil; intermediate oils; and sulfur, sweet, and sour crude oils. It sells its refined products through wholesale rack and bulk markets; and through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company owns and operates renewable diesel and ethanol plants, as well as produces renewable diesel and naphtha under the Diamond Green Diesel brand name. In addition, it offers ethanol and various co-products, including dry distiller grains, syrup, and inedible distillers corn oil to animal feed customers. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.

About HF Sinclair

HF Sinclair Corporation operates as an independent energy company. The company produces and markets gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals, specialty and modified asphalt, and others. It owns and operates refineries located in Kansas, Oklahoma, New Mexico, Utah, Washington, and Wyoming; and markets its refined products principally in the Southwest United States and Rocky Mountains, Pacific Northwest, and in other neighboring Plains states. In addition, the company supplies fuels to approximately 1,500 independent Sinclair branded stations and licenses the use of the Sinclair brand at approximately 300 additional locations. Further, it produces base oils and other specialized lubricants; and provides petroleum product and crude oil transportation, terminalling, storage, and throughput services to the petroleum sector. HF Sinclair Corporation is headquartered in Dallas, Texas.