Valero Energy Corporation (VLO), headquartered in San Antonio, Texas, manufactures, sells, and distributes petroleum-based and low-carbon liquid transportation fuels and petrochemical products. Valued at $43.3 billion by market cap, the company produces conventional gasoline, diesel, jet fuel, heating oil, asphalt, feedstocks, aromatics, and crude oil under Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands.
Shares of this largest independent refiner have underperformed the broader market over the past year. VLO has declined 4.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 20.7%. However, in 2025, VLO stock is up 11.7%,surpassing SPX’s 3.2% rise on a YTD basis.
Narrowing the focus, VLO’s outperformance is apparent compared to VanEck Oil Refiners ETF (CRAK). The exchange-traded fund has declined about 18.4% over the past year. Moreover, VLO’s double-digit returns on a YTD basis outshine the ETF’s 5.6% gains over the same time frame.
VLO's underperformance stems from declining refining margins and rising operational costs, driven by market fluctuations and higher input expenses. Also, weakened fuel demand along with increased global supply, has further pressured profitability.
On Jan. 30,VLO shares closed down more than 2% after reporting its Q4 results. Its adjusted EPS of $0.64 surpassed Wall Street expectations of $0.13. The company’s revenue was $30.8 billion, beating Wall Street forecasts of $30.7 billion.
For fiscal 2025, ending in December, analysts expect VLO’s EPS to decline 6.6% to $7.92 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing the forecast on another occasion.
Among the 18 analysts covering VLO stock, the consensus is a “Strong Buy.” That’s based on 15 “Strong Buy” ratings, two “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with 14 analysts suggesting a “Strong Buy.”
On Feb. 7, Piper Sandler Companies (PIPR) analyst Ryan Todd maintained a “Buy” rating on VLO with a price target of $149, implying a potential upside of 8.8% from current levels.
The mean price target of $151 represents a 10.3% premium to VLO’s current price levels. The Street-high price target of $164 suggests an upside potential of 19.8%.
