Valero Energy Corp (VLO) stock analysis

P/E below its 5-year median

Valero Energy's P/E of 8.2 is below its own 5-year median of 11.9.

P/E below the industry

Valero Energy's P/E of 8.2 is below the Petroleum Refining median of 13.9.

EV/EBITDA below its 5-year median

Valero Energy's EV/EBITDA of 5.5 is below its 5-year median of 7.8.

P/B above the industry

Valero Energy's price-to-book of 3.63 is above the Petroleum Refining median of 2.75.

Trading below fair value

The share price of $363.71 is below our fair value estimate of $489.64.

Margin of safety over 20%

The price is 25.7% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -11.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -36.1% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 24.6% over the last twelve months; the Petroleum Refining median is 18.4%.

Guidance issued

The latest outlook (Year Ending December 31, 2026 Expected capital investments attributable to Valero, Jan 29, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 12.3% over the last twelve months, against 3.4% a year earlier.

Return on equity over 15%

Return on equity was 50.1% over the last twelve months and averaged 23.2% over five years.

Return on capital over 10%

Return on invested capital was 46.6%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Valero Energy's return on equity of 50.1% is above the Petroleum Refining median of 17.7%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 8.4% over the last twelve months, against a 5-year average of 3.5%.

Net margin above the industry

Valero Energy's net margin of 8.4% is above the Petroleum Refining median of 7.0%.

Low debt

Debt is 39.3% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 78.1% five years ago to 39.3%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 145% of total debt.

Interest well covered

Operating income covers interest expense 30.9 times.

Short-term assets cover short-term debts

Current assets are 1.72 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 6.22; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Valero Energy paid dividends worth 1.3% of the share price over the last twelve months.

Yield below Treasuries

The 1.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Valero Energy yields 1.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 10.8% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.