Valero Energy (VLO) AI Stock Analysis

• Market Cap: $60.80B
• Dividend Yield: 2.74%
• Average Volume (3M): 2.74M
• Price to Earnings (P/E): 26.3
• Beta (1Y): 1.11
• 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: 305,009,550
• 10 Day Avg. Volume: 2,075,200
• 30 Day Avg. Volume: 2,742,910
• PEG Ratio: -1.82
• Price to Book (P/B): 2.12
• Price to Sales (P/S): 0.41
• P/FCF Ratio: 8.63
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 0.55
• Enterprise Value/Gross Profit: 10.07
• Enterprise Value/Ebitda: 10.33
• 1Y Price Target: $198.33
• Price Target Upside: -0.65% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15
• EPS Forecast (FY): 12.15
• Revenue Forecast (FY): $110.39B

• Rating: 69 Neutral
• Price Target: $219.00 ▲(9.70% 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

Strong Cash Generation

Sustained operating and free cash flow in 2025 demonstrates durable internal funding capacity. Consistent cash conversion supports disciplined capital allocation, sustained dividends and buybacks, and funds sustaining and growth capex without relying on incremental external financing across commodity cycles.

Improving Balance Sheet

Material debt reduction and a sizable equity cushion increase financial flexibility. Lower leverage reduces interest burden, supports the company's stated net-debt targets and minimum cash policy, and provides resilience to cyclical earnings swings while enabling continued shareholder returns and selective growth spending.

Operational Execution & Throughput

High utilization and record throughput reflect improved reliability and fixed-cost leverage, which sustain long-term margin potential when environment improves. Operational strength underpins ability to capture crude optionality, improve product yields, and extract more value per barrel across cycles.

Negative Factors

Earnings Cyclicality and Margin Compression

Material earnings and margin decline since the up-cycle highlights inherent refining cyclicality. Lower normalized profitability reduces return on capital and makes cash flows more sensitive to commodity spreads, limiting predictable earnings power and increasing execution reliance during tougher margin environments.

Renewable Diesel Profit Pressure

Weakness in renewable diesel — a strategic growth area — reduces diversification into lower-carbon fuels. Margin pressure from policy uncertainty, tariffs and feedstock volatility weakens the segment's contribution to long-term earnings and complicates the company's sustainability-linked growth trajectory.

Benicia Cessation & West Coast Headwinds

Permanent idling and associated D&A and transition costs create multi-quarter earnings drag and require logistical adjustments (supplemental imports). Regional tariff charges and weaker West Coast capture rates can persistently pressure margins and raise operating complexity in key markets.

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 Energy generates revenue primarily through the refining of crude oil into finished petroleum products, which is its largest revenue stream. The company operates a network of refineries that process a variety of crude oil types, allowing it to maximize margins based on market conditions. In addition to traditional fuels, Valero also produces renewable fuels, including biodiesel and ethanol, which contribute to its revenue, especially as demand for green energy increases. Another significant revenue source is the sale of petrochemical products, which are derived from the refining process and used in various industries. Valero's strategic partnerships with suppliers and customers, along with its investments in technology and optimization of refining processes, further enhance its profitability. The company also engages in marketing and logistics, which support its distribution of fuels and chemicals, adding to its revenue diversification.

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	5.83B	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: 199.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• 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 199.64 is above the 20-day moving average (MA) of 195.15, above the 50-day MA of 182.43, and above the 200-day MA of 158.38, indicating a bullish trend. The MACD of 4.74 indicates Positive momentum. The RSI at 59.29 is Neutral, neither overbought nor oversold. The STOCH value of 31.93 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	72 Outperform	$61.86B	14.31	15.55%	3.68%	-10.56%	-53.06%
VLO	69 Neutral	$60.80B	26.33	9.71%	2.74%	-8.48%	-56.92%
MPC	69 Neutral	$58.70B	14.77	19.33%	2.24%	-6.37%	-25.83%
DINO	68 Neutral	$9.13B	15.99	6.19%	4.26%	-9.55%	27.65%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
PBF	54 Neutral	$4.10B	-23.88	-2.92%	4.14%	-15.35%	-81.94%
DK	45 Neutral	$2.04B	-4.10	-115.95%	3.42%	-22.37%	-27.22%