Valero Energy (VLO)
Energy · $99.3B market cap · SEC CIK 0001035002
ahead of 82% of the S&P 500 · #5 of 21 in Energy
Next reports on Jan 27, 2027, after the close, with analysts expecting $18.89 in earnings per share.
52-week range $159.90 to $461.52. 24% below its 52-week high and 119% above its low.
The case for VLO
- Revenue up 24.6% on the year.
- Cheap for its growth: 4.7× mid-cycle earnings, where 6%+ a year of growth plus a 3.3% dividend would justify about 22×.
- Earns 51% back on shareholder equity.
- Pays a 3.3% dividend while you wait.
- Has compounded revenue at 13.6% a year over five years.
- Moves less than the market (beta 0.55).
The case against
- Weakest against its peers: net margin of 8% is thinner than 80% of Energy companies.
- Its weakest area is stability (46/100): beta 0.55, 1.4 years of cash flow to clear its debt, a 65% swing over the year.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Energy companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 85 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 63 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 51 |
| Momentumhow the price has behaved lately | 77 |
| Stabilityhow violently it moves, what it owes and what it pays you | 46 |
- Capital spending is missing from its filings, so free cash flow cannot be worked out. Operating cash flow stands in for the cash test, against a stricter bar.
- Its profits follow commodity prices, so its earnings and margin are read as half the latest year and half the average of the years on file (5), and last year's change in earnings per share is not counted as growth.
- Each factor except momentum is half fixed thresholds, half rank among the 21 Energy companies.
The financials
Revenue growth
Is the business growing? Yes
| Last 12 months | +24.6% |
|---|---|
| Over 5 years | +13.6% a year |
| FY2025 revenue | $123B (−6%) |
Free cash flow
Is it generating real cash? Can't tell: no capital spending in its filings
| FY2025 operating cash flow | $5.8B |
|---|---|
| Of profit, before capital spending | 248% |
Its filings do not give capital spending, so free cash flow cannot be worked out. Operating cash flow, which is before that spending, is shown instead, and the score judges it against a stricter bar.
Profit margins
Is profitability improving? Yes, improving
| Gross margin | 12% |
|---|---|
| Operating margin | 11% |
| Net margin, FY24 → FY25 → now | 2.1% → 1.9% → 8.4% |
Debt vs. cash
Is the balance sheet healthy? Yes, the debt is manageable
| Cash | $4.7B |
|---|---|
| Long-term debt | $8.3B |
| Net debt | $3.6B |
| Years to repay | 1.4 yrs |
Valuation
Is the stock price reasonable? Yes, it looks cheap
| P/E | 7.7× |
|---|---|
| P/E on mid-cycle earnings | 4.7× |
| Fair P/E for its growth | 22× |
| P/FCF | n/a |
| Forward P/E | 7.6× |
| EV / EBITDA | 5.7× |
Its profits follow commodity prices, so they are taken as half the latest year and half the average of recent years. At 4.7× those mid-cycle earnings (7.7× the latest year's) it trades well below the 22× that 6%+ a year of growth plus a 3.3% dividend would justify.
The financials, five years deep
Pulled from Valero Energy's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $123B | $130B | $145B | $176B | $114B |
| Change on the year | −6% | −10% | −18% | +55% | — |
| Free cash flow | |||||
| Free cash flow | — | $4.6B | $7.3B | $9.8B | $3.4B |
| Of revenue | — | 4% | 5% | 6% | 3% |
| Profit margins | |||||
| Operating margin | 2.6% | 2.9% | 8.2% | 8.9% | 1.9% |
| Net margin | 1.9% | 2.1% | 6.1% | 6.5% | 0.8% |
| Debt vs. cash | |||||
| Cash | $4.7B | $4.7B | $5.4B | $4.9B | $4.1B |
| Long-term debt | $8.3B | $8.1B | $9.2B | $9.2B | $11.9B |
| Net cash (debt) | −$3.6B | −$3.4B | −$3.8B | −$4.4B | −$7.8B |
Risk factors VLO lists in its 10-K
- Our financial results are affected by volatile margins, which are dependent upon factors beyond our control, including the prices we pay to acquire feedstocks and the market prices at which we can sell our products
- The availability and prices of our feedstocks and other critical supplies expose us to risks,
- We are subject to risks arising from the Renewable and Low-Carbon Fuel Programs, and other regulations, policies, international certifications, and standards impacting low-carbon fuels
- We are subject to risks arising from the availability and prices of natural gas, electricity, and water
- We are subject to risks arising from our operations and business activities outside of the U.S
- We are subject to risks arising from transportation and logistics disruptions and availability
- Differences in competitors’ businesses or resources may at times provide them a competitive advantage
- We are subject to risks arising from an interruption in any of our refineries or plants
- Our pursuit of capital and other strategic projects and actions exposes us to various risks
- Our investments in joint ventures and other entities limit our ability to manage risk
- Industry, market, and other developments could decrease the demand for our products
- We are subject to risks arising from climate- and other sustainability-related advocacy and pressure
- We may incur losses and additional costs as a result of our hedging transactions
- We are subject to risks arising from legal, regulatory, and political developments regarding climate- and environmental-related matters, or that are adverse to or restrict refining and marketing operations
- We are subject to risks arising from litigation, government action, and mandatory disclosure rules related to climate- and other sustainability-related matters, or aimed at the fossil fuel industry
- Regulations, Policies, and Standards Driving Low-Carbon Fuel Demand
- Applicable environmental, health, and safety laws and regulations expose us to various other risks
- We are subject to risks arising from compliance with and changes in tax laws
- We are subject to risks arising from a significant breach of our information systems
- Data privacy and security issues expose us to increased liability and operational changes and costs
- Uncertainty and illiquidity in financial markets, or changes in our credit profile or ratings, can adversely affect our ability to obtain credit and capital, increase our costs, and limit our flexibility
- We do not maintain insurance coverage that fully protects against all potential losses and liabilities
- We are exposed to risks arising from various labor-related matters