Valero Energy Faces Market Challenges But Analysts Remain Optimistic
Valero Energy Corporation (VLO), located in San Antonio, Texas, focuses on manufacturing, selling, and distributing petroleum and low-carbon liquid transportation fuels as well as petrochemical products. With a market cap of $43.3 billion, Valero produces a variety of products, including conventional gasoline, diesel, jet fuel, heating oil, asphalt, feedstocks, aromatics, and crude oil. These are marketed under well-known brands like Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco.
Yearly Performance Shows Mixed Results
This largest independent refiner has struggled in the market over the past year, with VLO stock declining 4.3%, while the S&P 500 Index ($SPX) increased by nearly 20.7%. Notably, in 2025, VLO shares have rebounded, climbing 11.7%, which outpaces the SPX’s 3.2% rise year-to-date.
Comparison with Industry and Recent Trends
When comparing VLO to the VanEck Oil Refiners ETF (CRAK), the performance gap is even clearer. The ETF has seen a drop of about 18.4% over the past year, while VLO has achieved double-digit returns year-to-date, far surpassing the ETF’s 5.6% gains.
Challenges Ahead: Costs and Demand
VLO’s recent underperformance can be attributed to falling refining margins and increasing operational costs. These challenges stem from broader market fluctuations and higher input expenses. Additionally, weak fuel demand, combined with a rise in global supply, has put further pressure on profitability.
Mixed Earnings Results
On January 30, VLO shares fell over 2% following the release of its Q4 results. The company reported an adjusted earnings per share (EPS) of $0.64, significantly higher than Wall Street’s expectations of $0.13. Revenue reached $30.8 billion, slightly beating forecasts of $30.7 billion.
For the fiscal year 2025, ending in December, analysts project VLO’s EPS to dip by 6.6% to $7.92 on a diluted basis. Historically, the company has shown a mixed earnings surprise track record, beating consensus estimates in three of the last four quarters and missing forecasts once.
Analysts’ Outlook on VLO
Among 18 analysts monitoring VLO stock, the consensus rating is a “Strong Buy,” supported by 15 “Strong Buy” ratings, two “Holds,” and one “Strong Sell.” This stance is more optimistic than two months ago when only 14 analysts recommended a “Strong Buy.”
On February 7, analyst Ryan Todd from Piper Sandler Companies (PIPR) maintained a “Buy” rating on VLO with a price target of $149, indicating an 8.8% potential upside from current levels. The average price target stands at $151, representing a 10.3% premium to VLO’s present price. Notably, the highest target of $164 suggests an upside potential of 19.8%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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