Stock Analysis on Net

Valero Energy Corp. (NYSE:VLO)

$22.49

This company has been moved to the archive! The financial data has not been updated since October 30, 2024.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Valero Energy Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


The financial data reveals several important trends regarding the company's performance and capital efficiency over the five-year period from 2019 to 2023.

Net operating profit after taxes (NOPAT)
NOPAT exhibited significant fluctuations across the years. In 2019, it was positive at 4,429 million USD but turned sharply negative in 2020 to -1,650 million USD, reflecting operational challenges or adverse market conditions during that year. Subsequently, a robust recovery is observed in 2021 with 5,561 million USD, followed by a wide increase to 13,520 million USD in 2022. However, in 2023, NOPAT declined again to 7,868 million USD, though it remained positive and significantly higher than the early years.
Cost of capital
The cost of capital showed a generally rising trend from 15.27% in 2019 to a peak of 16.81% in 2022, before a slight reduction to 16.64% in 2023. This upward trend suggests increasing financing costs or a higher risk perception by investors over the period, possibly reflecting market conditions or company-specific risks.
Invested capital
Invested capital steadily increased throughout the five years, starting at 40,757 million USD in 2019 and rising to 51,119 million USD by 2023. This consistent growth suggests ongoing investments and expansion of the company’s asset base.
Economic profit
Economic profit, which considers the cost of capital, was negative in 2019 at -1,794 million USD and deteriorated further to -7,363 million USD in 2020, in line with the negative NOPAT reported that year. There was an improvement in 2021 with a reduction in economic losses to -988 million USD, followed by a notable positive economic profit of 5,154 million USD in 2022. However, 2023 saw a return to negative economic profit of -639 million USD, indicating that despite positive accounting profits, returns were below the cost of capital.

In summary, while the company demonstrated strong operational recovery post-2020, with substantial increases in NOPAT and expanding invested capital, the increasing cost of capital and fluctuating economic profit imply challenges in consistently generating value above its capital costs. The negative economic profit in 2023 highlights the importance of carefully managing capital efficiency and cost factors to sustain long-term profitability and shareholder value.


Net Operating Profit after Taxes (NOPAT)

Valero Energy Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income (loss) attributable to Valero Energy Corporation stockholders
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for credit losses2
Increase (decrease) in LIFO reserve3
Increase (decrease) in equity equivalents4
Interest and debt expense, net of capitalized interest
Interest expense, operating lease liability5
Adjusted interest and debt expense, net of capitalized interest
Tax benefit of interest and debt expense, net of capitalized interest6
Adjusted interest and debt expense, net of capitalized interest, after taxes7
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Valero Energy Corporation stockholders.

5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2023 Calculation
Tax benefit of interest and debt expense, net of capitalized interest = Adjusted interest and debt expense, net of capitalized interest × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income (loss) attributable to Valero Energy Corporation stockholders.


Net Income (Loss) Attributable to Stockholders
The net income experienced a significant decline in the year ending 2020, moving from a positive 2,422 million US dollars in 2019 to a negative 1,421 million US dollars. This was followed by a recovery period, with net income rising to 930 million US dollars in 2021. The company then showed strong profitability in 2022, reaching 11,528 million US dollars, before seeing a decrease to 8,835 million US dollars in 2023. Overall, this pattern indicates volatility with a substantial rebound post-2020.
Net Operating Profit After Taxes (NOPAT)
The NOPAT data mirrors the trends seen in net income, starting at 4,429 million US dollars in 2019 and dropping to negative 1,650 million US dollars in 2020. There was a pronounced recovery in 2021, with NOPAT increasing to 5,561 million US dollars. The highest value in the series occurred in 2022, with 13,520 million US dollars, followed by a reduction to 7,868 million US dollars in 2023. This fluctuation highlights a similar pattern of operational profitability impact and recovery as observed in net income.

Cash Operating Taxes

Valero Energy Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Income tax expense (benefit)
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest and debt expense, net of capitalized interest
Cash operating taxes

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).


The analysis of the annual financial data reveals significant fluctuations in the income tax expense (benefit) and cash operating taxes over the five-year period.

Income Tax Expense (Benefit)
The income tax expense exhibited a notable negative value in 2020, reaching a benefit of -$903 million, which contrasts sharply with the positive expense of $702 million in 2019. Following this period, the tax expense rose to $255 million in 2021, before surging substantially to $3,428 million in 2022. In 2023, this figure decreased somewhat but remained elevated at $2,619 million, indicating a return to significant tax liabilities compared to the earlier years.
Cash Operating Taxes
Cash operating taxes mirrored the trend seen in the income tax expense, with a negative outflow of -$931 million in 2020 compared to $577 million in 2019. Subsequently, there was a marked increase to $519 million in 2021, which escalated dramatically to $3,508 million in 2022. In the most recent year, 2023, cash operating taxes declined slightly to $2,654 million, but still remained considerably higher than pre-2020 levels.

Overall, the data indicates a period of tax benefit in 2020 followed by a consistent and substantial increase in tax expenses and cash operating taxes in the subsequent years. The sharp rise in both metrics during 2022 and 2023 suggests changes in earnings, tax policies, or other factors impacting the company's tax payable status, resulting in a significantly higher cash outflow related to taxes despite the decrease from the 2022 peak.


Invested Capital

Valero Energy Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current portion of debt and finance lease obligations
Debt and finance lease obligations, less current portion
Operating lease liability1
Total reported debt & leases
Total Valero Energy Corporation stockholders’ equity
Net deferred tax (assets) liabilities2
Allowance for credit losses3
LIFO reserve4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Noncontrolling interests
Adjusted total Valero Energy Corporation stockholders’ equity
Construction in progress7
Invested capital

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of LIFO reserve. See details »

5 Addition of equity equivalents to total Valero Energy Corporation stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction in progress.


Total reported debt & leases
The total reported debt and leases exhibited a rising trend from 2019 to 2020, increasing from $10,962 million to $15,847 million. Subsequently, there was a consistent decline over the next three years, with figures decreasing to $15,125 million in 2021, then dropping more significantly to $12,722 million in 2022, and further to $12,637 million by the end of 2023. This indicates a period of increased leverage followed by a notable reduction in debt levels.
Total Valero Energy Corporation stockholders’ equity
Stockholders' equity showed a downward trajectory between 2019 and 2021, falling from $21,803 million to $18,430 million. However, a reversal occurred in 2022 when equity increased sharply to $23,561 million and continued to grow substantially to $26,346 million in 2023. This pattern suggests an initial period of equity erosion followed by a recovery and strengthening of the equity base.
Invested capital
Invested capital demonstrated a mostly steady upward movement over the five-year span. Starting at $40,757 million in 2019, it slightly increased in 2020 to $40,966 million, then advanced more markedly to $44,526 million in 2021. The growth trend continued with an increase to $49,772 million in 2022, reaching $51,119 million in 2023. This represents ongoing investment and capital deployment over the period.
Summary
Overall, the financial data reflect a phase of increased debt leverage in 2020, followed by deliberate deleveraging from 2021 onward. Concurrently, stockholders’ equity declined in the early years but rebounded strongly in the latest two years, indicating improved financial health or retained earnings accumulation. The continuous growth in invested capital suggests sustained investment efforts, aligning with the strengthening equity position and reduced reliance on debt financing during the latter years.

Cost of Capital

Valero Energy Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease obligations, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease obligations, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease obligations, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease obligations, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease obligations, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease obligations, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease obligations, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease obligations, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease obligations, including current portion3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease obligations, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Valero Energy Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Chevron Corp.
ConocoPhillips
Exxon Mobil Corp.
Occidental Petroleum Corp.

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


The financial data presents notable fluctuations in economic profit, invested capital, and the economic spread ratio over the five-year period from 2019 to 2023.

Economic Profit
The economic profit experienced significant variability throughout the period. In 2019, the company reported a negative economic profit of -1,794 million US dollars, which worsened considerably in 2020 to -7,363 million US dollars. However, there was a notable recovery in 2021, with the economic profit improving to -988 million US dollars and turning positive in 2022 to 5,154 million US dollars. In 2023, the economic profit again declined sharply to -639 million US dollars, indicating inconsistent profitability over the years.
Invested Capital
Invested capital showed a steady upward trend each year. Starting at 40,757 million US dollars in 2019, it incrementally increased annually, reaching 51,119 million US dollars by the end of 2023. This continuous growth suggests ongoing investment in the company’s assets or operations without any observed reductions over the period.
Economic Spread Ratio
The economic spread ratio followed a pattern similar to that of economic profit, albeit showing a distinct range of values. It was negative in 2019 at -4.4%, and sharply declined to -17.97% in 2020, indicating a substantial inefficiency in capital utilization. In 2021, the ratio improved to -2.22%, turning positive to 10.35% in 2022, which coincides with the positive economic profit for that year. Nevertheless, in 2023 the ratio reverted to a negative figure of -1.25%, suggesting a decline in the return on invested capital relative to its cost.

In summary, while invested capital consistently increased over time, the economic profit and economic spread ratio experienced significant volatility. The peak performance occurred in 2022, with positive economic profit and economic spread, but both measures declined again in 2023, indicating potential challenges in sustaining profitability and efficient capital use moving forward.


Economic Profit Margin

Valero Energy Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit1
Revenues, includes excise taxes on sales by certain of foreign operations
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Chevron Corp.
ConocoPhillips
Exxon Mobil Corp.
Occidental Petroleum Corp.

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × ÷ =

3 Click competitor name to see calculations.


Revenues Trend
Revenues exhibited a marked fluctuation over the five-year period. Initially, there was a significant decline from approximately 108.3 billion US dollars in 2019 to 64.9 billion US dollars in 2020. This was followed by a robust recovery and growth, with revenues reaching about 114.0 billion US dollars in 2021 and peaking at 176.4 billion US dollars in 2022. In 2023, revenues decreased to around 144.8 billion US dollars, though still markedly higher than the 2019 level.
Economic Profit Trends
The economic profit displayed a highly volatile trajectory. Starting from a negative 1.794 billion US dollars in 2019, it worsened considerably in 2020 to a negative 7.363 billion US dollars. In 2021, economic profit improved significantly, showing a much smaller loss of 988 million US dollars. The company then achieved a positive economic profit of 5.154 billion US dollars in 2022, indicating a substantial turnaround. However, this gain was not sustained into 2023, where economic profit declined again to negative 639 million US dollars.
Economic Profit Margin Trend
The economic profit margin mirrored the fluctuations seen in economic profit. It started at a negative margin of 1.66% in 2019, deteriorated substantially to -11.34% in 2020, then improved toward break-even at -0.87% in 2021. In 2022, the margin turned positive at 2.92%, reflecting improved profitability relative to revenues. However, by 2023, the margin decreased back into negative territory at -0.44%, reinforcing the observation of declining profitability.
Overall Insights
The data reveals a cyclical performance pattern with a pronounced downturn during 2020 followed by partial recovery in the subsequent years. Despite a peak in revenues and economic profit in 2022, the downward shift in 2023 for both measures suggests challenges in sustaining profitability. The economic profit margin's return to negative indicates that the incremental gains were not sufficient to generate consistent economic value beyond costs. These trends highlight volatility in operational efficiency and market conditions impacting profitability over the period analyzed.