Comparing Galp Energia SGPS (OTCMKTS:GLPEY) and Valero Energy (NYSE:VLO)

Valero Energy (NYSE:VLO) and Galp Energia SGPS (OTCMKTS:GLPEY) are both large-cap energy companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, dividends, risk and earnings.

Profitability

This table compares Valero Energy and Galp Energia SGPS’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%
Galp Energia SGPS	4.79%	18.15%	6.07%

Analyst Recommendations

This is a breakdown of current recommendations for Valero Energy and Galp Energia SGPS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valero Energy	0	6	10	2	2.78
Galp Energia SGPS	0	0	0	4	4.00

Valero Energy presently has a consensus price target of $166.00, suggesting a potential upside of 3.51%. Given Valero Energy’s higher probable upside, research analysts plainly believe Valero Energy is more favorable than Galp Energia SGPS.

Earnings and Valuation

This table compares Valero Energy and Galp Energia SGPS”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valero Energy	$129.88 billion	0.38	$2.77 billion	$2.40	66.82
Galp Energia SGPS	$22.54 billion	0.61	$1.13 billion	$0.71	13.90

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

Volatility and Risk

Valero Energy has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Galp Energia SGPS has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Dividends

Valero Energy pays an annual dividend of $4.52 per share and has a dividend yield of 2.8%. Galp Energia SGPS pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. 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. Galp Energia SGPS pays out 22.5% of its earnings in the form of a dividend. Valero Energy has raised its dividend for 4 consecutive years. Valero Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

78.7% of Valero Energy shares are held by institutional investors. 0.0% of Valero Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Valero Energy beats Galp Energia SGPS on 11 of the 18 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 Galp Energia SGPS

Galp Energia, SGPS, S.A. operates as an integrated energy operator in Portugal and internationally. The company operates through four segments: Upstream, Industrial & Midstream, Commercial, and Renewables and New Business. The Upstream segment engages in the exploration, development, and production of hydrocarbons primarily in Brazil, Mozambique, Namibia, and Angola. The Industrial & Midstream segment owns refineries in Portugal, as well as is involved in activities related to energy management of oil products, gas, and electricity. This segment provides storage and transportation infrastructure for oil and gas products, as well as engages in the sale of electricity to the grid in Portugal and Spain. The Commercial segment is involved in the areas of retail to final business-to-business and business to consumer customers of oil, gas, and electricity. The Renewables and New Business segment is involved in the development of solar and wind power generation projects in Portugal and Spain. In addition, it produces lithium-ion batteries, hydrogen, and biofuels; and operates service stations. Further, the company engages in the reinsurance business. The company was formerly known as Galp Petróleos e Gás de Portugal, SGPS, S.A. and changed its name to Galp Energia, SGPS, S.A. in September 2000. Galp Energia, SGPS, S.A. was incorporated in 1999 and is headquartered in Lisbon, Portugal.