Cosan (NYSE: CZZ) and Valero Energy (NYSE:VLO) are both mid-cap energy companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.
Insider & Institutional Ownership
26.6% of Cosan shares are held by institutional investors. Comparatively, 81.3% of Valero Energy shares are held by institutional investors. 0.5% of Valero Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk & Volatility
Cosan has a beta of 2.37, indicating that its stock price is 137% more volatile than the S&P 500. Comparatively, Valero Energy has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.
Earnings & Valuation
This table compares Cosan and Valero Energy’s top-line revenue, earnings per share and valuation.
||Earnings Per Share
Valero Energy has higher revenue and earnings than Cosan. Valero Energy is trading at a lower price-to-earnings ratio than Cosan, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings for Cosan and Valero Energy, as reported by MarketBeat.
||Strong Buy Ratings
Valero Energy has a consensus price target of $80.93, suggesting a potential downside of 16.35%. Given Valero Energy’s higher possible upside, analysts clearly believe Valero Energy is more favorable than Cosan.
Cosan pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. Valero Energy pays an annual dividend of $2.80 per share and has a dividend yield of 2.9%. Cosan pays out 25.0% of its earnings in the form of a dividend. Valero Energy pays out 60.7% 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. Cosan has increased its dividend for 7 consecutive years.
This table compares Cosan and Valero Energy’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Valero Energy beats Cosan on 11 of the 17 factors compared between the two stocks.
Cosan Limited (Cosan) is a holding company. The Company’s segments include Raizen Energia, Raizen Combustiveis, COMGAS, Cosan Logistica, Lubricants and Other business. The Company’s other business include other investments, in addition to the corporate activities. The Company offers Logistics services, including transportation, port loading and storage of sugar, leasing or lending of locomotives, wagons and other railway equipment, through its subsidiaries Rumo Logistica Operadora Multimodal S.A. (Rumo), logistic segment (Logistic). The Company is also engaged in production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (Moove) and Comma Oil & Chemicals Ltd. (Comma), under the Mobil licensed trademark in Brazil, Bolivia, Uruguay and Paraguay, in addition to the European and Asian market using the Comma brand and corporate activities (Lubricants).
About Valero Energy
Valero Energy Corporation (Valero) is an independent petroleum refiner and ethanol producer. The Company’s segments include refining, ethanol and Valero Energy Partners LP (VLP). The refining segment includes its refining operations and the associated marketing activities. The ethanol segment includes its ethanol operations and the associated marketing activities, and logistics assets that support its ethanol operations. The Company owns logistics assets (crude oil pipelines, refined petroleum product pipelines, terminals, tanks, marine docks, truck rack bays and other assets) that support its refining operations. Some of these assets are owned by VLP, which is a midstream master limited partnership owned by the Company. VLP’s assets include crude oil and refined petroleum products pipeline and terminal systems in the United States Gulf Coast and the United States Mid-Continent regions. Its refineries produce conventional gasolines, premium gasolines and lubricants, among others.
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