Valero vs Targa Resources
This page compares Valero Energy Corp. and Targa Resources Corp., examining their business models, financial performance, and market context in a neutral, accessible way. Educational content, not financial advice.
This page compares Valero Energy Corp. and Targa Resources Corp., examining their business models, financial performance, and market context in a neutral, accessible way. Educational content, not fina...
Why It's Moving
Valero's refining margins rebound sharply as energy sector eyes steady demand.
- Refining margins per barrel surged in Q3 alongside 97% throughput utilization, showcasing Valero's integrated network turning volatility into earnings power[1].
- Company affirmed steady $1.13 quarterly dividend through 2025, underscoring commitment to shareholder returns despite policy risks in renewables[1].
- Q4 and full-year 2025 earnings set for January 29, 2026, with analysts lifting estimates on robust operational momentum[2][4].
Targa Resources Bolsters Delaware Basin Dominance with $1.25B Stakeholder Midstream Acquisition
- Acquisition includes 460 miles of gathering pipe and 180 MMcf/d processing capacity at 60% utilization, offering leverage for rising production from key operators like Burk Royalty and Hilcorp.
- Brings ~15 Mb/d NGL output plus sour gas treating and carbon-capture assets eligible for 45Q tax credits, enhancing Targa's ability to fill its Speedway system and tap export demand.
- Priced at ~6x 2026 unlevered FCF, the deal creates optionality for non-core asset sales while integrating seamlessly with Targa's existing Permian systems.
Valero's refining margins rebound sharply as energy sector eyes steady demand.
- Refining margins per barrel surged in Q3 alongside 97% throughput utilization, showcasing Valero's integrated network turning volatility into earnings power[1].
- Company affirmed steady $1.13 quarterly dividend through 2025, underscoring commitment to shareholder returns despite policy risks in renewables[1].
- Q4 and full-year 2025 earnings set for January 29, 2026, with analysts lifting estimates on robust operational momentum[2][4].
Targa Resources Bolsters Delaware Basin Dominance with $1.25B Stakeholder Midstream Acquisition
- Acquisition includes 460 miles of gathering pipe and 180 MMcf/d processing capacity at 60% utilization, offering leverage for rising production from key operators like Burk Royalty and Hilcorp.
- Brings ~15 Mb/d NGL output plus sour gas treating and carbon-capture assets eligible for 45Q tax credits, enhancing Targa's ability to fill its Speedway system and tap export demand.
- Priced at ~6x 2026 unlevered FCF, the deal creates optionality for non-core asset sales while integrating seamlessly with Targa's existing Permian systems.
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Explore BasketInvestment Analysis
Valero
VLO
Pros
- Valero Energy has a diverse business model with three segments: refining, renewable diesel, and ethanol, providing multiple revenue streams.
- The company reported a strong third-quarter 2025 earnings beat and generated significant free cash flow, returning $1.3 billion to shareholders during that period.
- Valero maintains a solid market position with a $51.65 billion market capitalization and a stable dividend yield of approximately 2.67%.
Considerations
- Valero’s stock price is forecasted by some analysts to decline by around 11% to approximately $150 by the end of 2025, reflecting near-term pricing pressure.
- The company’s valuation scores modestly on some metrics, scoring 2 out of 6 on valuation checks, indicating potential concerns about overvaluation.
- Energy market cyclicality and volatility in refining margins and oil prices create execution and earnings risks, especially during supply chain disruptions.
Targa Resources
TRGP
Pros
- Targa Resources is a sizable energy infrastructure company with a market capitalization around $36.55 billion, signaling a strong industry presence.
- The company operates in midstream energy, benefiting from stable fee-based revenues and growing demand for natural gas gathering and processing.
- Targa has been expanding asset capacity and enhancing operational efficiency, positioning itself to leverage growth in natural gas production.
Considerations
- Targa Resources faces regulatory and commodity price exposure risks inherent to the midstream energy sector, which may pressure margins.
- The company’s growth is sensitive to natural gas market fluctuations and shifts in energy demand, posing cyclicality risks.
- Targa’s stock price performance is less broadly covered by analysts and presents less immediate price target visibility compared to larger integrated energy firms.
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