Valero Energy (NYSE:VLO – Get Free Report) and TXO Partners (NYSE:TXO – Get Free Report) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.
Dividends
Valero Energy pays an annual dividend of $4.80 per share and has a dividend yield of 1.1%. TXO Partners pays an annual dividend of $1.60 per share and has a dividend yield of 11.3%. Valero Energy pays out 19.9% of its earnings in the form of a dividend. TXO Partners pays out -207.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Valero Energy has raised its dividend for 4 consecutive years and TXO Partners has raised its dividend for 1 consecutive years. TXO Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Valero Energy has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, TXO Partners has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500.
Earnings & Valuation
This table compares Valero Energy and TXO Partners”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Valero Energy | $122.69 billion | 1.02 | $2.35 billion | $24.10 | 18.05 |
| TXO Partners | $401.01 million | 1.96 | -$21.62 million | ($0.77) | -18.39 |
Valero Energy has higher revenue and earnings than TXO Partners. TXO Partners is trading at a lower price-to-earnings ratio than Valero Energy, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
78.7% of Valero Energy shares are owned by institutional investors. Comparatively, 27.4% of TXO Partners shares are owned by institutional investors. 0.4% of Valero Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Valero Energy and TXO Partners’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Valero Energy | 5.17% | 26.74% | 11.92% |
| TXO Partners | -9.23% | -5.59% | -2.83% |
Analyst Recommendations
This is a breakdown of current ratings and price targets for Valero Energy and TXO Partners, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Valero Energy | 1 | 8 | 9 | 2 | 2.60 |
| TXO Partners | 1 | 0 | 2 | 2 | 3.00 |
Valero Energy currently has a consensus target price of $382.62, suggesting a potential downside of 12.04%. TXO Partners has a consensus target price of $19.00, suggesting a potential upside of 34.18%. Given TXO Partners’ stronger consensus rating and higher possible upside, analysts clearly believe TXO Partners is more favorable than Valero Energy.
Summary
Valero Energy beats TXO Partners 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 TXO Partners
TXO Partners, L.P., an oil and natural gas company, focuses on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The company was formerly known as TXO Energy Partners, L.P. and changed its name to TXO Partners, L.P. in May 2023. TXO Partners, L.P. was incorporated in 2012 and is based in Fort Worth, Texas.
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