Valero Energy (VLO) AI Stock Analysis

• Market Cap: $70.56B
• Dividend Yield: 2.74%
• Average Volume (3M): 3.30M
• Price to Earnings (P/E): 10.9
• Beta (1Y): 1.04
• Revenue Growth: -8.48%
• EPS Growth: -56.92%
• Country: US
• Employees: 9,898
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Refining & Marketing
• EPS (TTM): 3.82
• Shares Outstanding: 299,026,200
• 10 Day Avg. Volume: 4,882,406
• 30 Day Avg. Volume: 3,301,307
• PEG Ratio: -1.82
• Price to Book (P/B): 2.12
• Price to Sales (P/S): 0.41
• P/FCF Ratio: 10.00
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 0.63
• Enterprise Value/Gross Profit: 11.65
• Enterprise Value/Ebitda: 11.96
• 1Y Price Target: $202.79
• Price Target Upside: -14.06% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): 14.29
• Revenue Forecast (FY): $115.67B

• Rating: 69 Neutral
• Price Target: $258.00 ▲(9.34% Upside)
• Action: Downgraded Date: 02/26/26
• Date: Action: Downgraded 02/26/26

The score is driven primarily by solid financial resilience (improving leverage and strong free cash flow despite cyclically weaker earnings) and supportive technical momentum (price above key moving averages with positive MACD). The latest earnings call adds support via strong operational execution and shareholder-return discipline, while valuation (P/E 26.33 with a ~2.30% yield) tempers the overall score.

Positive Factors

Improving leverage / balance sheet cushion

Valero’s materially lower debt and sizable equity cushion improve financial flexibility across cycles. Reduced leverage and a net-debt target provide capacity for capital returns, opportunistic investment or weathering weak refining spreads without forcing distressed asset sales.

Strong cash generation and FCF conversion

Consistent, material free cash flow and high cash conversion in 2025 underpin sustainable shareholder returns and funding for sustaining/growth capex. Reliable cash generation enhances capital allocation choices and reduces reliance on external financing in downturns.

Operational reliability and high utilization

Near-record throughput and very high utilization reflect durable operational execution. Better reliability raises fixed-cost absorption, supports steadier refinery margins over time, and lowers unit costs—critical for sustaining earnings through commodity cycles.

Negative Factors

Renewable diesel margin weakness

A sharp drop in renewable diesel profitability undermines Valero’s diversification into lower‑carbon fuels. Persistent margin pressure, policy uncertainty and tariff/headwind exposure can limit the segment’s ability to offset refining cyclical swings and constrain long‑term low‑carbon earnings growth.

Benicia cessation adds structural costs

Phased shutdown and associated D&A create an ongoing earnings drag and execution complexity on the West Coast. That raises structural costs, may require supplemental imports and could depress regional margins while management executes closure and reconfigures supply.

Cyclical earnings and margin compression

Substantial revenue and profit declines from 2022 highs show the business remains highly cyclical and exposed to crack spread volatility. Lower normalized margins and earnings imply weaker baseline returns and greater cashflow variability across commodity cycles.

Valero Energy Business Overview & Revenue Model

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.

How the Company Makes Money

Valero makes money mainly by manufacturing and selling refined petroleum and renewable fuel products, earning margins based on the spread between input costs (crude oil and other feedstocks) and the market prices of its outputs (refined products). 1) Refining (primary earnings driver) - Core model: Valero buys crude oil and other feedstocks, runs them through refineries, and sells the resulting products (e.g., gasoline, diesel, jet fuel, heating oil/distillates, asphalt, petrochemical feedstocks, and other refined products). Profitability is driven by the “crack spread” (the difference between refined product prices and crude/feedstock costs), adjusted for operating costs, energy costs, and logistics. - Sales channels: Products are primarily sold to wholesale customers (such as marketers, jobbers, retailers, airlines, and other end users) and into spot markets; the company also participates in branded marketing in certain regions. - Key factors: Earnings are highly sensitive to refined product demand, regional and global product pricing, crude differentials (relative pricing among crude grades), refinery utilization and reliability, and the cost/availability of crude oil, natural gas, and other refinery inputs. 2) Renewable Diesel and other Renewable Fuels - Core model: Valero produces and sells renewable diesel (and related renewable products) made from renewable feedstocks (e.g., waste oils, vegetable oils, and other fats/oils). Revenue comes from selling renewable fuel volumes into transportation fuel markets. - Policy/credit economics: Earnings can be materially influenced by government programs and environmental credit markets tied to low-carbon fuels and renewable fuel blending requirements (e.g., renewable identification numbers and other compliance credits where applicable). The value and availability of these credits can increase or decrease margins depending on regulatory conditions. 3) Ethanol - Core model: Through its ethanol operations, Valero produces and sells ethanol and related co-products (such as distillers grains and corn oil). Revenue is primarily volume x market price for ethanol plus co-product sales. - Key factors: Margins depend on the spread between ethanol/co-product prices and input costs (notably corn and natural gas), as well as domestic and export demand and blending economics. 4) Marketing, logistics, and midstream-related economics - Valero captures additional value by optimizing distribution and product placement via terminals, pipelines, and other logistics. This can support earnings by lowering delivered costs, improving market access, and enabling the company to sell products into higher-value outlets. - If any specific partnership structures or material revenue-sharing arrangements are required: null. Overall, Valero’s revenue is largely volume-driven across refined products and renewable fuels, while profits are primarily margin-driven (refining and renewable/ethanol spreads), with results affected by commodity price volatility, regulatory credit markets, and operational performance.

Valero Energy Financial Statement Overview

Summary

Financials show a cyclical downshift from the 2022–2023 peak, with materially lower revenue, net income, and compressed net margins in 2025. Offsetting that, leverage has improved with lower debt and a sizable equity cushion, and cash generation remains a key strength with strong 2025 operating cash flow and free cash flow plus solid cash conversion.

Income Statement

Profitability has weakened materially versus the 2022–2023 peak: revenue fell from $176.4B (2022) to $122.7B (2025) and net income dropped from $11.5B (2022) / $8.8B (2023) to $2.35B (2025). Margins also compressed sharply (net margin down to ~1.9% in 2025 vs ~6–6.5% in 2022–2023), which is typical of a down-cycle in refining. Positives include remaining solidly profitable in 2024–2025 and still generating positive operating earnings, but the current earnings power is clearly lower and more volatile than the prior up-cycle.

Balance Sheet

Leverage is moderate and improving: total debt declined from $15.8B (2020) to $10.6B (2025), and debt relative to equity improved to ~0.45x in 2025 (down from ~0.84x in 2020). Equity remains sizable at $23.7B (2025), providing cushion through cyclical swings. The main weakness is that returns on equity have normalized lower with the earnings downturn (about ~9.9% in 2025 vs very elevated levels in 2022–2023), highlighting sensitivity to margin cycles.

Cash Flow

Cash generation remains a key strength: operating cash flow was $5.83B in 2025 and free cash flow was also $5.83B, with free cash flow running at about 100% of net income in 2025 (strong cash conversion). While operating cash flow has come down from the 2022 peak ($12.6B), free cash flow stayed positive across 2021–2025 and rebounded strongly in 2025 versus 2024. The weakness is cyclicality—cash flow has shown meaningful swings (including negative free cash flow in 2020), so durability depends on industry conditions.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	122.69B	129.88B	144.77B	176.38B	113.98B
Gross Profit	5.37B	4.76B	12.89B	16.75B	3.08B
EBITDA	6.72B	7.03B	14.66B	18.34B	4.55B
Net Income	2.35B	2.77B	8.84B	11.53B	930.00M
Balance Sheet
Total Assets	47.50B	60.14B	63.06B	60.98B	57.89B
Cash, Cash Equivalents and Short-Term Investments	4.69B	4.66B	5.42B	4.86B	4.12B
Total Debt	10.62B	11.54B	12.64B	12.72B	15.13B
Total Liabilities	23.78B	32.62B	34.53B	35.51B	38.07B
Stockholders Equity	23.73B	24.51B	26.35B	23.56B	18.43B
Cash Flow
Free Cash Flow	5.03B	5.78B	8.32B	10.89B	4.19B
Operating Cash Flow	5.83B	6.68B	9.23B	12.57B	5.86B
Investing Cash Flow	-1.84B	-1.98B	-1.86B	-2.81B	-2.16B
Financing Cash Flow	-4.18B	-5.05B	-6.94B	-8.85B	-2.85B

Valero Energy Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 235.96
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VLO, the sentiment is Positive. The current price of 235.96 is above the 20-day moving average (MA) of 215.70, above the 50-day MA of 199.03, and above the 200-day MA of 165.04, indicating a bullish trend. The MACD of 10.61 indicates Negative momentum. The RSI at 70.12 is Negative, neither overbought nor oversold. The STOCH value of 73.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VLO.

Valero Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PSX	73 Outperform	$69.21B	11.90	15.90%	3.68%	-10.56%	-53.06%
VLO	69 Neutral	$70.56B	10.87	9.88%	2.74%	-8.48%	-56.92%
MPC	68 Neutral	$68.75B	12.26	24.01%	2.24%	-6.37%	-25.83%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
DK	62 Neutral	$2.53B	5.68	-14.06%	3.42%	-22.37%	-27.22%
DINO	62 Neutral	$10.53B	14.84	6.25%	4.26%	-9.55%	27.65%
PBF	57 Neutral	$5.21B	-19.51	-3.05%	4.14%	-15.35%	-81.94%

Valero Energy Corporate Events

Valero Energy Announces New $850 Million Senior Notes

On March 5, 2026, Valero Energy Corporation agreed to issue and sell $850 million aggregate principal amount of 5.150% senior notes due 2036 under an underwriting agreement with a syndicate of investment banks. The notes will be issued under an existing 2015 indenture with U.S. Bank Trust Company, National Association as trustee, with the offering registered under the Securities Act and conducted via an effective shelf registration.

The transaction, expected to close on March 10, 2026, forms part of Valero’s ongoing use of the debt capital markets to support its financing needs and balance sheet strategy. By locking in long-term funding at a fixed rate, the company aims to enhance financial flexibility, which may influence its capital allocation, refinancing plans, and overall cost of capital for stakeholders.

The most recent analyst rating on (VLO) stock is a Buy with a $249.00 price target. To see the full list of analyst forecasts on Valero Energy stock, see the VLO Stock Forecast page.