VLO

Energy

Valero Energy

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2016–2025(10yr)

Revenue

Net Income

Free CF

Metric	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$75.7B	$94.0B	$117.0B	$108.3B	$64.9B	$114.0B	$176.4B	$144.8B	$129.9B	$122.7B	-5.5%
Gross Profit	$4.4B	$4.5B	$5.6B	$4.8B	-$740.0M	$3.1B	$16.8B	$12.9B	$4.8B	$5.4B	+13.0%
Gross Margin	5.8%	4.8%	4.8%	4.4%	-1.1%	2.7%	9.5%	8.9%	3.7%	4.4%	+0.7pp
Operating Income	$3.6B	$3.6B	$4.6B	$3.8B	-$1.6B	$2.1B	$15.7B	$11.9B	$3.8B	$3.2B	-15.3%
Operating Margin	4.7%	3.8%	3.9%	3.5%	-2.4%	1.9%	8.9%	8.2%	2.9%	2.6%	-0.3pp
Net Income	$2.3B	$4.1B	$3.1B	$2.4B	-$1.4B	$930.0M	$11.5B	$8.8B	$2.8B	$2.3B	-15.2%
Net Margin	3.0%	4.3%	2.7%	2.2%	-2.2%	0.8%	6.5%	6.1%	2.1%	1.9%	-0.2pp
Free Cash Flow	$3.5B	$4.1B	$995.0M	$2.7B	-$1.5B	$3.4B	$9.8B	$7.3B	$4.6B	—	—
FCF Margin	4.7%	4.4%	0.9%	2.5%	-2.3%	3.0%	5.6%	5.1%	3.6%	—	—
EPS (Diluted)	$4.94	$9.16	$7.29	$5.84	$-3.50	$2.27	$29.04	$24.92	$8.58	$7.57	-11.8%

Total Debt$8.3B

Cash & Equiv.$4.7B

Net Debt$3.6B

3 min read

1. THE BIG PICTURE

Valero is a high-volume, low-margin processor currently enjoying a surge in refining profitability—net income reached $1.1 billion in the fourth quarter of 2025—even as it aggressively builds out a low-carbon fuel platform. Its future depends on whether its strategic shift into sustainable aviation fuel (SAF) and renewable diesel can provide a stable offset to the structural volatility and regulatory costs inherent in traditional petroleum refining.

2. WHERE THE RISKS HIT HARDEST

Valero’s feedstock flexibility is threatened by regulatory and trade policy because while the DGD plants can process 100% waste feedstocks, U.S. tariffs on foreign feedstocks can create competitive cost disadvantages that curtail production (Risks). Furthermore, Valero’s strategic refinery positioning is threatened by regional regulatory pressure; despite the advantage of its Gulf Coast and mid-continent locations, Valero Energy’s California operations recently triggered a $1.1 billion asset impairment loss due to the state's stringent climate-related mandates (Recent Results). Finally, the integrated platform advantage is threatened by operational interruptions, as the heavy reliance on complex logistics like marine docks and pipelines makes Valero Energy vulnerable to severe weather and mechanical failures that result in lost productivity (Risks).

3. WHAT THE NUMBERS SAY TOGETHER

The financial data reveals a company operating with extreme efficiency on razor-thin margins. While Valero achieved record refining throughput and ethanol production in late 2025, its net margin of 1.3% is the lowest among its peer group, trailing significantly behind integrated players like EOG at 25.9% (Peer Benchmarking). Revenue fell slightly to $30.37 billion in the most recent quarter, yet net income jumped from $281 million to $1.1 billion year-over-year (8-K). This divergence suggests that Valero’s current profitability is driven by internal "operational and commercial execution" and favorable market spreads rather than structural top-line growth. Sentiment remains cautious, with short interest at 4.4% of the float, likely reflecting concerns over the sustainability of these refining margins.

4. IS IT WORTH IT AT THIS PRICE?

At 15.7x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Valero is trading in line with its peers, representing a negligible premium over the 14.4x peer median (Peer Benchmarking). The market is pricing in approximately 2.2% long-term growth (Computed Valuation). This valuation appears justified by Valero Energy's capital allocation strategy; while revenue growth is currently negative (-5.5%), Valero’s 3.2% buyback yield provides a mechanical lift to earnings per share that supports the market's growth assumptions. If long-term growth expectations were to slip to 2.0%, the justified multiple would fall to 15.3x. The primary factor that could force a lower valuation is the unpredictable cost of Renewable Fuel Standard (RFS) compliance, which management identifies as a significant uncertainty for the refining segment (Risks).

5. WHAT WOULD CHANGE THIS VIEW?

More cautious if operating income in the Renewable Diesel segment continues to contract—it fell from $170 million to $92 million in the most recent quarter—suggesting that low-carbon fuel margins are not yet offsetting refining volatility (8-K).
More constructive if the St. Charles FCC Unit optimization project begins operations in the second half of 2026 on schedule, signaling a further boost to high-margin product yields (8-K).

6. BOTTOM LINE

Structural Advantage: A highly integrated logistics network and proprietary management systems (CTEMS) that enable record-breaking mechanical availability and feedstock flexibility.

Bottom Line: Valero is a disciplined, low-cost operator that is fairly priced for its modest growth profile, provided it can successfully navigate the rising costs of environmental compliance.

Source: Synthesis · LLM Analysis

3 min read

1. Top 5 Material Risks

Feedstock and Product Margin Volatility: Valero Energy’s financial results depend on the margin between the cost of feedstocks (crude oil, corn) and the market price of finished products. These margins are influenced by global supply/demand, geopolitical tensions, and OPEC+ production controls.
Operational Reliability: Valero Energy’s refineries and plants are subject to planned and unplanned downtime. Interruptions from accidents, mechanical failures, or natural disasters (e.g., hurricanes, winter storms) result in lost productivity and repair costs.
Regulatory Compliance and Low-Carbon Fuel Programs: Valero Energy faces risks from evolving regulations like the RFS and LCFS. Proposed EPA rules (RFS Set II) could impose infeasible RVOs, impact RIN prices, and adversely affect the Refining and Renewable Diesel segments.
Feedstock Availability and Costs: Valero Energy must purchase nearly all its feedstocks. Disruptions in supply chains, including those caused by U.S. tariffs on foreign feedstocks used by DGD, can lead to curtailed production and competitive cost disadvantages.
Climate and Sustainability Pressure: Valero Energy faces pressure from advocacy groups and new disclosure mandates (e.g., California’s climate-related disclosure laws). Compliance with these evolving standards strains company resources and exposes Valero Energy to litigation and reputational risk.

2. Company-Specific Risks

Texas Grid Scarcity Pricing: Many of Valero Energy’s Texas-based refineries are exposed to “scarcity pricing” for electricity, which increases operational costs during periods of supply and demand imbalance.
DGD Joint Venture Control: Valero Energy does not have full control over its DGD joint venture; significant decisions—such as asset acquisitions, debt issuance, or distribution policy—require approval from the other joint venture member.
Water Supply Challenges: Certain refineries in Texas have experienced ongoing water supply challenges, which have resulted in, and are expected to continue to result in, additional capital expenditures and ongoing costs.
Lack of Upstream Integration: Unlike some competitors, Valero Energy does not produce its own primary feedstocks (other than DCOs from its ethanol plants) and lacks a company-owned retail network, limiting its ability to offset downstream losses.

3. Regulatory/Legal Risks

California SBx 1-2 and AB 1: These statutes impose significant uncertainty and potential costs on Valero Energy’s refining operations in California.
Mexico Retail Price Caps: Mexico has implemented an informal, nationwide retail price cap on regular gasoline that could expand or become legally binding, impacting Valero Energy’s marketing activities in the region.
Climate Litigation: Valero Energy is a co-defendant in an Oregon state court lawsuit seeking damages for alleged climate-related harms and a federal class-action lawsuit in California regarding LCFS compliance costs.
Reporting Burdens: New York’s GHG reporting requirements and the EU’s Corporate Sustainability Reporting Directive (CSRD) impose burdensome disclosure obligations that may require the release of competitively sensitive information.

4. Financial Impact Map

Feedstock and Product Margin Volatility → Revenues / Gross Margin → Price level changes between feedstock purchase and product sale significantly affect financial results. Operational Interruptions → Earnings / Operating Expenses → Lost productivity and repair costs are not always fully recoverable through insurance. Renewable and Low-Carbon Fuel Programs → Operating Expenses / Cost of Goods Sold → Costs to administer obligations and purchase RINs/LCFS credits impact profitability. Feedstock Supply Disruptions → Cost of Goods Sold / Product Margins → Inability to obtain optimal supplies leads to higher operating costs and reduced product margins. Tax Law Changes → Cash Tax Liabilities / Effective Tax Rate → Changes in tax laws, including the OBBB and global minimum tax, could materially affect cash tax liabilities.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Jan 2026	—
10-Q	Oct 2025	Sep 2025
14A	Mar 2025	—