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Valero Jumps 80.3% in the Past Year: Is the Stock Worth Buying Now?
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Key Takeaways
Valero posted Q1 adjusted EPS of $4.22 on $32.4B revenues amid stronger refining margins.
VLO's refinery flexibility helps shift product output to capture higher margins in volatile markets.
Valero benefits from tight global refining capacity and rising exports to higher-netback markets.
Valero Energy Corporation (VLO - Free Report) posted a quarterly earnings beat, delivering adjusted earnings of $4.22 per share and total revenues of $32.4 billion, supported by stronger refining and ethanol margins. The strong quarterly results reflected strong execution across the system, with refining throughput averaging 2.9 million barrels per day.
Valero Energy is a leading refining player with a robust network of 14 refineries located across the United States, Canada and Peru. The company has a combined high-complexity throughput capacity of 3 million barrels per day, which distinguishes it from other independent refiners. Valero Energy’s refineries have a combined Nelson Complexity Index of 11.5, which implies that they can process a wide variety of feedstock, convert it into higher-value products and shift product yields according to market conditions.
Over the past year, VLO stock has gained 80.3%, outperforming the industry’s 54.3% growth. Its peers, Phillips 66 (PSX - Free Report) and PBF Energy (PBF - Free Report) , have grown 36.4% and 82.2%, respectively, during the same time frame. While price performance demonstrates the attractiveness of a stock to some extent, it would be wiser to closely examine the company’s current business environment before offering any investment advice.
Image Source: Zacks Investment Research
Operational Flexibility of VLO’s Refineries
Valero Energy’s refineries have the operational flexibility to process various kinds of feedstock, including heavy sour, medium/light sour and sweet crude. The operational flexibility of VLO’s refineries and refinery optimization provides a strategic advantage to the company.
The flexibility to vary product yields allows the refineries to shift their production between light products and distillates, adjusting their mix of refined products according to market and pricing conditions. This production shift, based on market signals, allows them to capture higher margins and support profitability. This flexibility also provides VLO’s refineries with a competitive edge, particularly during volatile times, as the company can focus on products that offer stronger margins. In first-quarter 2026, management said the team optimized the refining system during commodity-market disruption to deliver stronger returns.
Refining Fundamentals & Export Growth Support VLO’s Profitability
On its latest earnings call, management noted that the global refining capacity remains constrained amid energy market disruptions, with demand significantly exceeding supply. In addition, low product inventories in key markets are expected to support refining fundamentals, keeping margins steady.
The company has access to coastal refineries, which improves its connectivity to international markets and offers greater export exposure. In particular, VLO’s advantaged Gulf Coast refining footprint benefits from broad feedstock flexibility and growing product exports into higher-netback markets, including Latin America. The pull in the export market and tight global supply currently support demand for U.S. refined products. Furthermore, the company’s supply-chain expansion into high-demand-growth markets enables better margin capture and supports refining profitability.
Image Source: Valero Energy Corporation
Valuation Snapshot
Considering the valuation snapshot, it has become evident that investors are now willing to pay a premium for Valero Energy due to the company’s strong fundamentals and a supportive business environment. This is reflected in the fact that VLO trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.41x compared with the broader industry average of 5.84x. Its peers, PSX and PBF, are currently trading at 12.37x and 9.57x trailing 12-month EV/EBITDA, respectively.
Image Source: Zacks Investment Research
Time to Bet on the Stock or Wait?
Valero Energy is expected to benefit from strong refining market fundamentals amidst low product inventories and constrained refining capacity globally. The robust network of refineries across the United States and the operational flexibility of its refineries enable the company to convert cheaper feedstock into high-value products, thereby supporting profitability.
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Valero Jumps 80.3% in the Past Year: Is the Stock Worth Buying Now?
Key Takeaways
Valero Energy Corporation (VLO - Free Report) posted a quarterly earnings beat, delivering adjusted earnings of $4.22 per share and total revenues of $32.4 billion, supported by stronger refining and ethanol margins. The strong quarterly results reflected strong execution across the system, with refining throughput averaging 2.9 million barrels per day.
Valero Energy is a leading refining player with a robust network of 14 refineries located across the United States, Canada and Peru. The company has a combined high-complexity throughput capacity of 3 million barrels per day, which distinguishes it from other independent refiners. Valero Energy’s refineries have a combined Nelson Complexity Index of 11.5, which implies that they can process a wide variety of feedstock, convert it into higher-value products and shift product yields according to market conditions.
Over the past year, VLO stock has gained 80.3%, outperforming the industry’s 54.3% growth. Its peers, Phillips 66 (PSX - Free Report) and PBF Energy (PBF - Free Report) , have grown 36.4% and 82.2%, respectively, during the same time frame. While price performance demonstrates the attractiveness of a stock to some extent, it would be wiser to closely examine the company’s current business environment before offering any investment advice.
Operational Flexibility of VLO’s Refineries
Valero Energy’s refineries have the operational flexibility to process various kinds of feedstock, including heavy sour, medium/light sour and sweet crude. The operational flexibility of VLO’s refineries and refinery optimization provides a strategic advantage to the company.
The flexibility to vary product yields allows the refineries to shift their production between light products and distillates, adjusting their mix of refined products according to market and pricing conditions. This production shift, based on market signals, allows them to capture higher margins and support profitability. This flexibility also provides VLO’s refineries with a competitive edge, particularly during volatile times, as the company can focus on products that offer stronger margins. In first-quarter 2026, management said the team optimized the refining system during commodity-market disruption to deliver stronger returns.
Refining Fundamentals & Export Growth Support VLO’s Profitability
On its latest earnings call, management noted that the global refining capacity remains constrained amid energy market disruptions, with demand significantly exceeding supply. In addition, low product inventories in key markets are expected to support refining fundamentals, keeping margins steady.
The company has access to coastal refineries, which improves its connectivity to international markets and offers greater export exposure. In particular, VLO’s advantaged Gulf Coast refining footprint benefits from broad feedstock flexibility and growing product exports into higher-netback markets, including Latin America. The pull in the export market and tight global supply currently support demand for U.S. refined products. Furthermore, the company’s supply-chain expansion into high-demand-growth markets enables better margin capture and supports refining profitability.
Image Source: Valero Energy Corporation
Valuation Snapshot
Considering the valuation snapshot, it has become evident that investors are now willing to pay a premium for Valero Energy due to the company’s strong fundamentals and a supportive business environment. This is reflected in the fact that VLO trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.41x compared with the broader industry average of 5.84x. Its peers, PSX and PBF, are currently trading at 12.37x and 9.57x trailing 12-month EV/EBITDA, respectively.
Image Source: Zacks Investment Research
Time to Bet on the Stock or Wait?
Valero Energy is expected to benefit from strong refining market fundamentals amidst low product inventories and constrained refining capacity globally. The robust network of refineries across the United States and the operational flexibility of its refineries enable the company to convert cheaper feedstock into high-value products, thereby supporting profitability.
Given the current business environment, investors should consider buying the VLO stock, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.