THE BUSINESSWEEK 50 RANKINGS + 25

36

Valero Energy

The largest U.S. oil refiner, with $91 billion in revenues, this San Antonio (Tex.) company has grown mostly through acquisitions, snapping up other plants at a fraction of what they would cost to build new. A turnaround in the refining cycle has sent earnings zooming. With no new plants built in the U.S. since the late 1970s and gasoline demand climbing, Valero is sitting pretty: It earned a record $5.5 billion last year, almost triple what it earned in 2004. In January, 2006, CEO William Klesse replaced 25-year Valero veteran William Greehey, an industry legend who spent more than $1 billion remodeling the company’s lone Corpus Christi refinery in the early 1980s when Valero was primarily a pipeline company. The big bet paid off. Expect Klesse to be somewhat more cautious. This year he’s trimming capital spending slightly, to $3.5 billion.

Overall Grade

A

Market Data

VLO

Market Value
(2/28/2007)

$34.7 Billion

Profitability*

32.3%

B+

Sales Growth Rate**

35.5%

B

12-Month Sales

$91.1 Billion

12-Month Net Income

$5.5 Billion

Total Return Past 12 Months

7.6%

Past 36 Months

290.6%

Economic SectorEnergy
IndustryOil & Gas Refining & Marketing
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE

William R. Klesse

William R. Klesse, 60

CEO since 2006


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Data as of 2/28/07 provided by Standard & Poor's Compustat