Valero Energy Corporation (VLO Quick QuoteVLO - Free Report) is set to report third-quarter 2026 results on Oct. 22, before the market opens.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $21.23 per share, implying a 480.1% surge from the year-ago reported number. VLO has witnessed three upward and one downward earnings estimate revision over the past 30 days. The Zacks Consensus Estimate for third-quarter revenues is currently pinned at $38.8 billion, suggesting a 20.6% rise from the year-ago actuals.

VLO beat the consensus estimate for earnings in each of the trailing four quarters, delivering an average surprise of 26.8%.

This is depicted in the graph below:  

Image Source: Zacks Investment Research

Valero Energy’s Q3 Earnings Whispers

Our proven model does not conclusively predict an earnings beat for VLO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

The company has an Earnings ESP of -0.32% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors to Consider for VLO

Valero Energy is expected to have delivered a stable performance in the third quarter, driven by high refining margins. Refining margins are likely to have remained elevated in the third quarter due to continued tensions and supply disruptions in the Middle East, which tightened refined product markets. In addition, attacks on Russian refining facilities and infrastructure further constrained refining capacity, amplifying the tightness in refined product markets. Moreover, low global light-product inventories are expected to have supported refining fundamentals. These factors are likely to have supported refining gains and aided VLO’s profitability.

However, the company’s performance is likely to have been tempered by elevated crude prices earlier in the third quarter. Per the data from the U.S. Energy Information Administration, the West Texas Intermediate (“WTI”) spot crude price averaged $80.46 per barrel in July and $83.90 per barrel in August, further increasing to $97.31 per barrel in September. Notably, these figures are significantly higher than those recorded in the corresponding period of 2025. Higher crude prices are expected to raise input costs for its refining operations, thereby affecting its results. These factors are likely to have affected demand and pricing dynamics, potentially hampering the company’s quarterly performance.

VLO’s Price Performance & Valuation

VLO’s stock has soared 190% over the past year compared with the 157.7% rise of the composite stocks belonging to the industry. PBF Energy (PBF Quick QuotePBF - Free Report) and Par Pacific Holdings (PARR Quick QuotePARR - Free Report) , two other leading refining players, have gained 213.6% and 145.9%, respectively.

Image Source: Zacks Investment Research

VLO appears relatively overvalued, at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 9.4X, above the broader industry average of 6.48X, implying that the stock is currently trading at a premium. PBF Energy and Par Pacific are currently trading at a trailing 12-month EV/EBITDA of 5.82X and 3.51X, respectively.

Image Source: Zacks Investment Research

Investment Thesis of Valero Energy

Valero Energy is among the largest independent refiners in the United States, having a combined high-complexity throughput capacity of nearly 3 million barrels per day across its refineries. VLO’s Gulf Coast refining network provides it with feedstock sourcing flexibility and access to high-demand export markets to sell its refined products.

Moreover, its advanced refineries can process various kinds of feedstock, including Venezuelan and Canadian crude. These heavy crude grades generally trade at a discount to the WTI benchmark, owing to their high sulfur content, thereby lowering input costs. Additionally, the operational flexibility of its refineries enables VLO to shift product yields toward high-demand, higher-margin products and optimize its crude slate, allowing the company to better capitalize on tighter global refined-product markets.

Valero also boasts a strong financial and liquidity position, with a net debt-to-capitalization ratio of 11% at the end of the second quarter. Furthermore, VLO holds $7.9 billion of cash and cash equivalents, along with $5.3 billion of available liquidity under its bank facilities. VLO’s healthy financial position also allows it to return excess cash to investors through share buybacks. However,  the refining industry is inherently cyclical and volatile, with margins and crack spreads depending largely on crude oil prices and overall demand for refined petroleum products, which may result in earnings volatility.

PBF and PARR: Refining Stocks to Gain From the Current Market Environment?

PBF Energy has a geographically diverse refining network with large-scale processing capacity and a highly complex refining system. It operates six refineries — Delaware City Refinery, Paulsboro Refinery, Toledo Refinery, Chalmette Refinery, Torrance Refinery and Martinez Refinery— with a combined throughput capacity of 1 million barrels per day and the ability to process a wide range of feedstocks. The diversified refining footprint provides the company with exposure to several regional refining markets, supporting higher margins.

Par Pacific Holdings operates an integrated downstream energy business across the United States, with fuel retail operations in Hawaii, Washington and Idaho; refining operations in Hawaii, Wyoming, Washington and Montana; a cumulative refining capacity of 219,000 barrels per day; and a supporting logistics network. Its logistics network includes 13 million barrels of storage, along with marine and pipeline assets for transportation. The commercial flexibility of its downstream network allows the company to capitalize on changing market conditions to support profitability.

Both PBF and PARR currently carry a Zacks Rank #1. The refining players are expected to benefit from strong refining fundamentals and elevated crack spreads driven by continued supply disruptions through the Strait of Hormuz and low refined product inventories.

Final Verdict

VLO is expected to have benefited from strong refining fundamentals, which are currently supported by the disruptions in supply through the Strait of Hormuz. Low product inventories are also expected to have supported refining margins in the near term. Given the business environment and its healthy financial position, investors should consider buying the VLO stock, sporting a Zacks Rank #1, at present.