VLO

Based on the provided analysis, here is a comprehensive assessment of Valero Energy (VLO).

Technical Analysis VLO exhibits strong positive momentum, having significantly outperformed the market over the past three months. It currently trades near the top of its 52-week range, suggesting an extended uptrend. While not technically overbought, its proximity to this high may present a near-term resistance level where a pullback could occur.

Fundamental Analysis Fundamentally, VLO is robust, showing strong sequential improvement in revenue and a more than doubling of net income in its latest quarter. The company maintains excellent financial health with low debt, strong liquidity, and healthy cash flow. Its operational efficiency is sound, supported by effective working capital management.

Valuation & Risk Valuation presents a mixed picture; the high trailing P/E is offset by a much lower forward P/E and a very attractive PEG ratio, indicating strong growth potential relative to price. Key risks include inherent exposure to volatile refining margins and the potential for significant price declines, as evidenced by its substantial historical drawdown, despite a lower-than-market volatility (beta).

Buy Recommendation

Valero Energy (VLO) presents a compelling case for investment, driven by strong operational performance, excellent financial health, and positive earnings momentum. The current valuation appears justified by its growth prospects, particularly when considering the forward earnings estimates. While investors should be mindful of resistance near the 52-week high and sector-specific volatility, the fundamental strength supports a positive outlook. A buy recommendation is warranted for investors seeking exposure to a well-managed player in the energy sector.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Of course. Here is a 12-month investment outlook for Valero Energy Corp. (VLO).

**12-Month Outlook for VLO**

1. Key Catalysts: The outlook is supported by disciplined operational execution and the potential for sustained, profitable refining margins. Key catalysts include strong global demand for refined products, Valero's strategic advantage in exporting refined products to international markets, and its growing renewable diesel segment, which diversifies revenue streams.

2. Potential Risks: The primary risk is a significant contraction in refining margins, which are highly sensitive to global economic health and crude oil price volatility. A sharp economic slowdown that reduces demand for gasoline and diesel, or an unforeseen surge in refinery utilization rates globally, could negatively impact profitability. The stock's position near its 52-week high also suggests it may be vulnerable to a near-term pullback.

3. Target Price: While a specific analyst target was not provided, the positive fundamental outlook, strong earnings momentum, and attractive growth-adjusted valuation (PEG ratio) suggest a constructive path forward. Investors should monitor the stock's ability to consolidate near current levels as a sign of continued strength.

*Note: This analysis is for informational purposes only and does not constitute investment advice.*

Wall Street Consensus

Most Wall Street analysts are optimistic about VLO's 12-month outlook, with consensus target around $186.51, indicating expected upside potential.

Overall, VLO has investment potential but also faces challenges. Here are key factors to weigh before investing.

Overall Assessment: VLO has demonstrated strong positive momentum with substantial gains over both medium and short-term horizons, significantly outperforming the broader market.

Short-term Performance: The stock has delivered robust returns, climbing 5.72% over the past month and an impressive 12.18% over the past three months. This performance is notably strong, as evidenced by its 8.81% relative strength versus the market over the three-month period, indicating a clear trend of outperformance.

Current Position: With a current price of $181.74, VLO trades near the top of its 52-week range ($99 - $192), standing approximately 95% of the way toward its 52-week high. While not technically overbought, this proximity to the high suggests the stock is in an extended uptrend and may be susceptible to a pullback near this resistance level, especially given its moderate beta of 0.767.

Revenue & Profitability VLO demonstrated strong sequential improvement in Q3 2025, with revenue growing to $32.2 billion from $29.9 billion in Q2 and net profit margin expanding significantly from 2.4% to 3.4%. This improved profitability, evidenced by the net income more than doubling to $1.1 billion, reflects stronger operational performance despite the inherently thin gross margins typical of the refining sector.

Financial Health The company maintains a conservative financial structure, with a low debt ratio of approximately 18% and a healthy interest coverage ratio of nearly 11 times. The solid current ratio of 1.6 exceeds 1.0, indicating good short-term liquidity, while the manageable debt-to-equity ratio of 0.45 underscores a balanced approach to leverage without excessive risk.

Operational Efficiency VLO's operational efficiency is sound, with a return on equity of 4.6% and a decent asset turnover of 0.55, albeit reflecting the capital-intensive nature of refining. The cash conversion cycle of 19 days is efficient, demonstrating effective management of working capital, while the strong free cash flow per share of $5.51 provides ample financial flexibility.

VLO's valuation metrics present a mixed picture. The trailing PE of 38.66 appears elevated, while the forward PE of 12.0 suggests significantly improved earnings expectations ahead. The PB ratio of 2.07 and PS ratio of 0.45 indicate moderate valuation relative to balance sheet and sales figures. The very low PEG ratio of 0.22 signals strong growth potential relative to the current valuation, though the high EV/EBITDA of 24.03 warrants caution regarding the company's debt-adjusted earnings power.

Without available industry average data for comparison, a definitive relative valuation assessment cannot be provided. VLO's metrics should be analyzed against specific refining and marketing peers to determine whether these ratios represent a premium or discount to comparable companies in the energy sector.

Of course. Here is a risk analysis for VLO based on the provided metrics.

Volatility Risk: VLO demonstrates moderate volatility risk relative to the broader market. Its beta of 0.767 indicates the stock is approximately 23% less volatile than the market benchmark, typically the S&P 500. However, investors should note the significant 1-year maximum drawdown of -26.79%, which highlights the stock's susceptibility to substantial price declines during market downturns or sector-specific pressures. This combination suggests that while daily price movements may be relatively subdued, the potential for larger, sustained downward moves is a notable risk.

Other Risks: The absence of a reported short interest is a neutral-to-positive signal, suggesting the market does not hold a strong, concentrated bearish view on the stock's immediate downside potential. However, this does not eliminate fundamental risks, which for a refiner like VLO are heavily tied to volatile crude oil input costs and refining margins (crack spreads). Furthermore, the company's operations are inherently exposed to macroeconomic factors, regulatory changes impacting the energy sector, and potential liquidity risks during periods of extreme market stress, despite the lack of short-selling pressure.