VLO
Valero Energy Corporation$228.03
Sell
Target $172.18
Report: Mar 08, 2026Energy • Oil & Gas Refining & Marketing • Cyclical OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$228.03-24.5%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$172.18
(24% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$258.43
52 Week Low$99.00
Avg. 3 Month Volume3.90M
Efficiency
LTM Gross Margin4.4%
LTM EBITDA Margin5.6%
LTM EBIT Margin3.0%
LTM Operating Margin2.6%
LTM ROA4.0%
LTM ROE9.9%
LTM ROIC7.3%
LTM ROCE8.3%
Capital Structure
Market Cap (MM)$73.9B
Enterprise Value (MM)$79.8B
Shares Outstanding303.00M
Total Debt (MM)$10.62B
Cash & Equivalents (MM)$4.69B
LTM Net Debt (MM)$5.93B
LTM Net Debt/EBITDA0.9x
Growth
TTM Rev. Growth-5.5%
Last 3-Yr Rev. CAGR-11.4%
Last 3-Yr EBITDA CAGR-27.6%
Last 3-Yr EPS CAGR-36.1%
Valuation
Street Target Price$193.75
LTM EV/Revenue0.7x
LTM EV/Gross Profit14.7x
LTM EV/EBIT21.8x
LTM EV/EBITDA11.7x
LTM P/E31.5x
LTM EV/FCF19.9x
LTM P/FCF18.4x
LTM P/TB1.3x
LTM P/B3.1x
Dividend Yield1.9%
Payout Ratio60.4%
Executive SummarySituation: Current price is $228.03 versus fair value $172.18 (-24.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Normalization of Refining Crack Spreads As new global capacity stabilizes, the outsized margins of the last two years will revert to historical means, directly impacting Valero's top-line and profitability. Bear case centers on Lower-for-Longer Margin Environment A structural shift in global fuel demand or persistent overcapacity could keep crack spreads below the levels required for Valero to earn its cost of capital. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Valero's Gulf Coast scale and 98% utilization provide best-in-class operational efficiency; the Diamond Green Diesel JV positions the company as a leader in the energy transition with high-margin SAF potential.
Bear Case
Refining margins are normalizing as global capacity increases, leading to a 15% decline in net income to 2.35 billion USD; ROIC of 7.3% has fallen below the 9.5% cost of capital, indicating value destruction at current reinvestment rates.
Key Catalysts
Near-Term (0-6 months)Impact: Critical
Normalization of Refining Crack Spreads As new global capacity stabilizes, the outsized margins of the last two years will revert to histori...
Mid-Term (6-18 months)Impact: High
Completion of West Coast Restructuring The cessation of refining at Benicia by April 2026 will remove a high-cost asset but likely trigger a...
Long-Term (18+ months)Impact: Moderate
Valero is relevant for analysis now because it is trading at a peak valuation (29.0x P/E) just as its core refining margins have begun a cle...
Primary Risks
Concern: High
Lower-for-Longer Margin Environment A structural shift in global fuel demand or persistent overcapacity could keep crack spreads below the l...
Concern: Medium
Balance Sheet Erosion via Buybacks Aggressive share repurchases (15.2 billion USD over 4.8 years) have reduced the cash pile to 4.7 billion...
Concern: Medium
The stewardship verdict is a Governance Outcome Tree: 1. Status Quo: Management continues aggressive buybacks, but the share price stagnates...
Recent Activity
2025-10-23SEC Filing (8-K)
+6.96%Valero Energy reports Q3 2025 financial results
2025-05-10SEC Filing (8-K)
+6.15%Valero Energy 2025 Annual Meeting results and director retirement
2024-07-25SEC Filing (8-K)
+5.50%Valero Energy reports Q2 2024 financial results
2023-02-10SEC Filing (SC 13G/A)
+6.12%Vanguard Group reports 10.85% stake in Valero Energy
2023-02-07SEC Filing (SC 13G/A)
+5.02%State Street Corporation reports 7.26% stake in Valero Energy
Valuation Table
9.5/10Decision Grade