Valero Energy Corporation (VLO Quick QuoteVLO - Free Report) reported first-quarter 2026 adjusted earnings of $4.22 per share, up from 89 cents a year ago. The result beat the Zacks Consensus Estimate of $3.07 by 37.46%. Total revenues rose 7.0% year over year to $32,381 million and topped the consensus mark of $30,881 million by 4.86%.

The strong quarterly results reflected strong execution across the system, with refining throughput averaging 2.9 million barrels per day. Segment profitability also improved in renewable diesel and ethanol, helping VLO capitalize on a volatile commodity backdrop.

Valero Energy Corporation Price, Consensus and EPS Surprise

Valero Energy Corporation price-consensus-eps-surprise-chart | Valero Energy Corporation Quote

VLO Posts Sharp Profitability Rebound

Net income attributable to Valero stockholders totaled $1,263 million in the first quarter compared with a net loss of $595 million in the prior-year period. Operating income improved to $1,731 million from an operating loss of $900 million, pointing to materially better underlying economics.

The cost structure also looked steadier. Total cost of sales increased to $30,329 million from $29,751 million, while depreciation and amortization expense rose to $828 million from $680 million. This mix still allowed the company to translate stronger market conditions into a meaningful earnings recovery.

Valero’s Revenue Mix Shifts With Segment Trends

Refining remained the primary revenue engine. Revenues from external customers were $30,805 million, up from $28,757 million in the year-ago quarter, reflecting stronger realized pricing and improved commercial capture.

Outside refining, the mix was more nuanced. Renewable diesel external revenues increased to $711 million from $493 million, while ethanol external revenues declined to $865 million from $1,008 million, even as profitability in ethanol improved. These movements underscore how product pricing and feedstock dynamics can reshape segment revenues even when operating performance is solid.

VLO’s Refining Metrics Strengthen Across the System

Adjusted operating income in the Refining segment was $1,830 million versus $605 million a year ago. The refining margin increased to $3,908 million from $2,490 million, supporting the segment’s improved financial output.

On a unit basis, the refining margin per barrel of throughput rose to $14.90 from $9.78. Adjusted refining operating income per barrel of throughput climbed to $6.98 from $2.38, indicating that stronger margin capture was partly offset by higher operating and depreciation expenses across the network.

Of the total refining throughput volume, the Gulf Coast contributed approximately 60.2%, while the Mid-Continent, North Atlantic and West Coast regions accounted for 15.6%, 17.3% and 6.9%, respectively.

Valero Sees Better Renewables and Ethanol Profitability

Renewable Diesel reported an operating income of $139 million compared with an operating loss of $141 million in the prior-year quarter. The renewable diesel margin rose to $302 million from $5 million, and margin per gallon of sales increased to $1.11 from $0.02, signaling a significant improvement in per-unit profitability.

Ethanol operating income increased to $90 million from $20 million, supported by higher segment margin. Ethanol margin improved to $273 million from $193 million, and margin per gallon of production advanced to $0.66 from $0.48. Production volumes averaged 4,619 thousand gallons per day, up from 4,466 thousand gallons per day, reinforcing that better operating leverage and margin capture helped lift results.

VLO Highlights Cash Returns and Disciplined Spending

Cash generation remained a key feature of the quarter. Adjusted net cash provided by operating activities was $1,591 million. Valero returned $938 million to stockholders during the quarter, representing a payout ratio of 59% of adjusted net cash provided by operating activities.

Capital investments totaled $448 million, including $404 million directed toward sustaining needs such as turnarounds, catalysts and regulatory compliance, while capital investments attributable to Valero were $430 million. The company announced a quarterly cash dividend of $1.20 per share in the first quarter of 2026.

Valero’s Balance Sheet and Strategy Stay in Focus

Liquidity was sizable at quarter end, with cash and cash equivalents of $5.7 billion. Total debt stood at $9.2 billion, and total finance lease obligations were $2,300 million. Valero reported a debt-to-capitalization ratio, net of cash and cash equivalents, of 18% as of March 31, 2026.

The company began idling processing units and ceased operation of fuel production units at its Benicia Refinery during the quarter, with depreciation and amortization expense including approximately $100 million of incremental depreciation tied to Benicia. Separately, the $230 million FCC Unit optimization project at the St. Charles Refinery is expected to be completed and to begin operations in the third quarter of 2026.

VLO’s Zacks Rank and Other Key Picks

VLO currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks from the energy sector are Equinor ASA (EQNR Quick QuoteEQNR - Free Report) , Galp Energia SGPS SA (GLPEY Quick QuoteGLPEY - Free Report) and FuelCell Energy (FCEL Quick QuoteFCEL - Free Report) . While Equinor and Galp Energia sport a Zacks Rank #1 each, Fuelcell carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Equinor ASA is one of the leading integrated energy companies globally and a major supplier of natural gas in Europe. The recent conflict between the United States and Iran has resulted in a spike in gas prices and disrupted LNG supply, following damage to critical infrastructure in Qatar, tightening global LNG supply. This is expected to boost demand for Eqinor’s gas exports to Europe, positioning the company to benefit from heightened prices. The company’s expansion in the renewable energy space positions it for long-term growth as more countries transition toward cleaner energy solutions to meet their climate goals.

Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly with the Mopane discovery in the Orange Basin, offshore Namibia. This discovery allows Galp to diversify its global presence with the potential to become a significant oil producer in the region. It is engaged in refining and marketing of oil products and natural gas marketing and sales.

FuelCell Energy is a clean energy company that offers scalable, reliable, low-carbon power solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company’s proprietary molten carbonate fuel cell systems generate electricity through an electrochemical process instead of burning fuel, reducing carbon emissions and minimizing the environmental impact of power generation. FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.