Valero Energy Corporation (VLO) has seen its shares rise 85.2% over the past year, surpassing the 35.8% gain of the broader industry. The company’s competitive advantage is bolstered by its extensive coastal refinery network, capable of processing various feedstocks into higher-value refined fuels. Valero’s operational flexibility, low-cost structure, and advanced logistics allow it to maximize margins amid fluctuating energy prices.
Currently, energy prices are down due to advancements in U.S.-Iran peace talks, potentially reducing feedstock costs for Valero. Additionally, the company has increased its exposure to renewable fuels with its Diamond Green Diesel joint venture, producing approximately 1.2 billion gallons of renewable fuels annually, and the recently completed sustainable aviation fuel (SAF) project, which can enhance renewable diesel production capacity by up to 50%.
Valero’s trailing 12-month enterprise value to EBITDA (EV/EBITDA) stands at 8.16X, higher than the industry average of 5.49X. The Zacks Consensus Estimate for Valero’s 2026 earnings has also been revised upward recently.
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