Download PDF

1. Company Snapshot

1.a. Company Description

Valero Energy Corporation manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally.The company operates through three segments: Refining, Renewable Diesel, and Ethanol.It produces conventional, premium, and reformulated gasolines; gasoline meeting the specifications of the California Air Resources Board (CARB); diesel fuels, and low-sulfur and ultra-low-sulfur diesel fuels; CARB diesel; other distillates; jet fuels; blendstocks; and asphalts, petrochemicals, lubricants, and other refined petroleum products, as well as sells lube oils and natural gas liquids.


As of December 31, 2021, the company owned 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day; and 12 ethanol plants with a combined ethanol production capacity of approximately 1.6 billion gallons per year.It sells its refined products through wholesale rack and bulk markets; and through approximately 7,000 outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands.The company also produces and sells ethanol, dry distiller grains, syrup, and inedible corn oil primarily to animal feed customers.


In addition, it owns and operates crude oil and refined petroleum products pipelines, terminals, tanks, marine docks, truck rack bays, and other logistics assets; and owns and operates a plant that processes animal fats, used cooking oils, and inedible distillers corn oils into renewable diesel.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.

Show Full description

1.b. Last Insights on VLO

Valero Energy's recent performance was driven by strong Q4 2025 earnings, with net income of $1.1 billion and adjusted net income of $1.2 billion. The company's robust crack spreads, resilient demand, and strong refining margins supported impressive free cash flow. A significant increase in earnings per share to $3.82, beating estimates, also contributed to the performance. Additionally, the company's balance sheet strength enabled aggressive buybacks and a 2.5% dividend yield. (Source: Valero Energy Corp Q4 2025 Earnings Call Highlights)

1.c. Company Highlights

2. Valero Energy's 2025 Earnings: A Strong Performance

Valero Energy Corporation reported a net income attributable to Valero stockholders of $1.1 billion or $3.73 per share for 2025, compared to $281 million or $0.88 per share for 2024. Excluding adjustments, the adjusted net income attributable to Valero stockholders was $1.2 billion or $3.82 per share for 2025, beating analyst estimates of $3.27. The refining segment reported $1.7 billion of operating income for 2025, up from $437 million in 2024, driven by record refining throughput and record ethanol production. The company's refining cash operating expenses were $5.3 per barrel in 2025.

Publication Date: Feb -03

📋 Highlights
  • Net Income Surge:: 2025 net income surged to $1.1B ($3.73/share) vs. $281M ($0.88/share) in 2024, driven by strong refining and ethanol margins.
  • Refining Throughput Record:: Achieved 3.1M barrels/day throughput in 2025, with 98% capacity utilization and $5.3/barrel operating expenses.
  • Capital Allocation:: 2026 capex of $1.7B ($1.4B sustaining, $300M growth) alongside $4.7B cash balance and 18% net debt/cap ratio, supporting share repurchases (40% reduction since 2014).
  • Venezuelan Crude Integration:: Processing capacity for heavy crude exceeded 240K bpd, leveraging favorable differentials and market dynamics like 30% higher freight rates.
  • Ethanol Growth:: Ethanol segment operating income rose to $117M in 2025 vs. $20M in 2024, aided by low feedstock costs and export demand, with potential PTC credit benefits in 2026.

Segment Performance

The renewable diesel segment reported operating income of $92 million for 2025, compared to $170 million in 2024, while the ethanol segment reported $117 million of operating income, up from $20 million in 2024. The decrease in renewable diesel segment income was attributed to various factors, including changes in production and pricing. As Eric Fisher discussed, the company's ability to capture the Production Tax Credit (PTC) has been a key factor in its success, and the segment is expected to perform better in 2026 due to policy tailwinds and a reduction in tariffs.

Outlook and Guidance

For 2026, Valero expects capital investments attributable to Valero to be approximately $1.7 billion, with about $1.4 billion allocated to sustaining the business and the balance to growth projects. The company expects refining throughput volumes to fall within specific ranges for the first quarter. As Gary Simmons noted, most consultant data shows similar supply-demand balances to last year, but with lower refinery utilization, which is expected to impact the company's operations.

Valuation

With a P/E Ratio of 23.26 and an EV/EBITDA of 13.0, Valero's valuation appears reasonable, considering its strong financial performance and growth prospects. The company's ROE of 9.59% and ROIC of 3.91% indicate a decent return on equity and invested capital. Analysts estimate next year's revenue growth at 2.5%, which is relatively modest. Given the company's strong balance sheet and cash flow generation, with a net debt to cap ratio of 18% and a year-end cash balance of $4.7 billion, Valero is well-positioned to continue returning value to shareholders through share repurchases and dividends, with a Dividend Yield of 2.51%.

Operational Highlights

The company's operational performance was strong, with record refining throughput and record ethanol production. The addition of Venezuelan crude to the company's slate is expected to benefit its complex refineries, as Randy noted. The company's coker utilization is expected to increase as it receives more Venezuelan and Canadian heavy crude, which will help drive profitability.

3. NewsRoom

Card image cap

Phillips 66 Stock: Buy at a Premium or Wait for a Better Entry Point?

Feb -16

Source: zacks.com

Card image cap

Atria Investments Inc Cuts Position in Valero Energy Corporation $VLO

Feb -15

Source: defenseworld.net

Card image cap

Oil Refiner Stocks Are Having a Banner 2026. Should You Invest $1,000?

Feb -15

Source: fool.com

Card image cap

Valero Shares Rally Toward 52-Week High: Buy the Strength or Wait?

Feb -13

Source: zacks.com

Card image cap

Valero Ardmore refinery fire results in one death, KXII reports

Feb -13

Source: reuters.com

Card image cap

Envestnet Asset Management Inc. Lowers Stock Position in Valero Energy Corporation $VLO

Feb -11

Source: defenseworld.net

Card image cap

Advisors Asset Management Inc. Sells 3,108 Shares of Valero Energy Corporation $VLO

Feb -11

Source: defenseworld.net

Card image cap

3 Refining & Marketing Stocks Investors Should Track Closely

Feb -10

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.84%)

6. Segments

Refining (Incl. VLP and Excl. Renewable Diesel)

Expected Growth: 4.6%

Growing demand for transportation fuels, increasing global refining capacity, and Valero Energy Corporation's strategic positioning drive the refining segment's growth.

Renewable Diesel

Expected Growth: 10.0%

Growing demand for low-carbon fuels, increasing adoption of renewable energy sources, and government incentives drive the growth of Valero Energy Corporation's renewable diesel segment.

Ethanol

Expected Growth: 4.8%

Growing demand for low-carbon fuels and increasing adoption of ethanol blending in the transportation sector drive Valero's ethanol segment growth, supported by its strong production capabilities and established customer relationships.

Corporate and Eliminations

Expected Growth: 3.7%

Valero's Corporate and Eliminations segment is expected to grow, driven by increasing overhead costs, improving operating efficiency, and strategic investments, which will contribute to the company's overall profitability.

7. Detailed Products

Refined Products

Valero Energy Corporation refines crude oil into various petroleum products, including gasoline, diesel fuel, jet fuel, and petrochemicals.

Ethanol

Valero Energy Corporation produces ethanol, a biofuel used as a gasoline additive to increase octane and reduce emissions.

Renewable Diesel

Valero Energy Corporation produces renewable diesel, a low-carbon, high-performance diesel fuel made from renewable resources.

Petrochemicals

Valero Energy Corporation produces petrochemicals, including ethylene, propylene, and butadiene, used in the production of plastics, fibers, and other materials.

Lubricants

Valero Energy Corporation produces lubricants, including motor oils, transmission fluids, and industrial lubricants.

Asphalt

Valero Energy Corporation produces asphalt, a petroleum-based product used in road construction and maintenance.

8. Valero Energy Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Valero Energy Corporation faces moderate threat from substitutes due to the availability of alternative energy sources such as solar, wind, and hydroelectric power. However, the high cost of switching to these alternatives and the lack of infrastructure to support widespread adoption mitigate this threat.

Bargaining Power Of Customers

Valero Energy Corporation's customers have low bargaining power due to the lack of concentration in the market and the high switching costs associated with changing energy providers.

Bargaining Power Of Suppliers

Valero Energy Corporation's suppliers have moderate bargaining power due to the presence of a few large suppliers of crude oil and refined products. However, the company's large scale of operations and diversified supply chain mitigate this power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the energy industry, including the need for significant capital investments and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry in the energy industry is high due to the presence of several large players, including ExxonMobil, Chevron, and ConocoPhillips, which leads to intense competition for market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.09%
Debt Cost 6.22%
Equity Weight 72.91%
Equity Cost 11.59%
WACC 10.13%
Leverage 37.15%

11. Quality Control: Valero Energy Corporation passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
MPLX

A-Score: 7.3/10

Value: 4.7

Growth: 5.3

Quality: 6.8

Yield: 10.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Valero Energy

A-Score: 6.6/10

Value: 5.7

Growth: 6.7

Quality: 4.7

Yield: 7.0

Momentum: 9.0

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
EOG Resources

A-Score: 6.5/10

Value: 6.5

Growth: 5.7

Quality: 7.8

Yield: 8.0

Momentum: 2.5

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Marathon Petroleum

A-Score: 6.3/10

Value: 5.7

Growth: 7.6

Quality: 3.4

Yield: 5.0

Momentum: 9.0

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
Diamondback Energy

A-Score: 6.2/10

Value: 5.8

Growth: 7.8

Quality: 6.4

Yield: 7.0

Momentum: 3.5

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Phillips 66

A-Score: 5.7/10

Value: 4.8

Growth: 4.1

Quality: 3.7

Yield: 8.0

Momentum: 6.0

Volatility: 7.3

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

199.46$

Current Price

199.46$

Potential

-0.00%

Expected Cash-Flows