Valero Energy (NYSE:VLO) Stock Jumps 4% - Should You Buy?

Key Points

• Valero shares rose 4% to about $400 after the company reported earnings of $23.90 per share and revenue of $46.1 billion, both ahead of expectations. Analysts maintain a “Moderate Buy” consensus, though the average target of $379.94 is below the current price.
• Valero authorized an additional $10 billion share-repurchase program and agreed to buy a former Houston refinery site for $320.5 million, potentially expanding its refining infrastructure and supporting shareholder returns.
• Key risks include weakening refining margins after a major rally and increased put-option activity, which may reflect greater hedging or bearish speculation. The company also declared a quarterly dividend of $1.20 per share, yielding approximately 1.2% annually.

Valero Energy Corporation (NYSE:VLO - Get Free Report) was up 4% during mid-day trading on Friday. The stock traded as high as $400.60 and last traded at $400.04. 4,223,414 shares traded hands during mid-day trading, an increase of 28% from the average daily volume of 3,301,728 shares. The stock had previously closed at $384.57.

Key Valero Energy News

Here are the key news stories impacting Valero Energy this week:

• Positive Sentiment: $10 billion share-repurchase authorization: Valero reportedly approved substantial additional buyback capacity following a strong quarter. Repurchases could support earnings per share and provide a significant source of shareholder returns. Valero authorizes USD 10.0 billion buyback
• Positive Sentiment: Strong operating performance and favorable valuation: Valero’s latest quarterly results substantially exceeded expectations, with $23.90 in earnings per share and $46.1 billion in revenue. Analysts’ consolidated fair-value estimate rose to approximately $426.42 from $401.53, while the stock’s reported P/E ratio remains below 9, supporting the view that earnings may still justify the valuation. Valero fair value lift
• Positive Sentiment: Houston refinery-site acquisition: Valero agreed to acquire LyondellBasell’s former Houston refinery site and related assets for $320.5 million. The purchase could expand Valero’s Houston infrastructure and refining footprint at a relatively modest cost, with closing expected in the fourth quarter of 2026. Valero to acquire former Houston refinery
• Neutral Sentiment: Put-option activity increased: Traders bought roughly 16,660 put options, about 41% above average volume. This may indicate increased hedging or bearish speculation, but options activity alone does not establish a definitive outlook for VLO.
• Negative Sentiment: Refining-cycle concerns: Commentary urging investors to sell refiners highlights the risk that unusually strong margins and a major rally have already been priced in. If gasoline and diesel cracks weaken, Valero’s earnings and valuation could face pressure. It’s Time to Sell the Refiners

Wall Street Analysts Forecast Growth

A number of research analysts recently commented on the company. Wells Fargo & Company upped their price objective on Valero Energy from $485.00 to $489.00 and gave the stock an "overweight" rating in a research note on Friday, October 23rd. UBS Group reiterated a "buy" rating and issued a $467.00 target price on shares of Valero Energy in a research note on Tuesday, October 6th. Barclays boosted their price target on shares of Valero Energy from $441.00 to $443.00 and gave the company an "overweight" rating in a report on Friday, October 23rd. Mizuho upped their price target on shares of Valero Energy from $300.00 to $434.00 and gave the stock a "neutral" rating in a research report on Thursday, October 8th. Finally, Zacks Research raised shares of Valero Energy from a "hold" rating to a "strong-buy" rating in a report on Tuesday, August 4th. Three research analysts have rated the stock with a Strong Buy rating, eight have given a Buy rating, eight have given a Hold rating and two have given a Sell rating to the company. According to MarketBeat, the company has a consensus rating of "Moderate Buy" and a consensus target price of $379.94.

Valero Energy Price Performance

The business's 50-day simple moving average is $396.46 and its 200 day simple moving average is $283.96. The company has a market capitalization of $115.18 billion, a P/E ratio of 9.00, a P/E/G ratio of 0.20 and a beta of 0.59. The company has a current ratio of 1.64, a quick ratio of 1.23 and a debt-to-equity ratio of 0.37.

Valero Energy (NYSE:VLO - Get Free Report) last posted its quarterly earnings data on Thursday, October 22nd. The oil and gas company reported $23.90 earnings per share (EPS) for the quarter, beating the consensus estimate of $21.17 by $2.73. Valero Energy had a net margin of 8.44% and a return on equity of 47.50%. The business had revenue of $46.10 billion during the quarter, compared to analysts' expectations of $42.71 billion. During the same period last year, the firm posted $3.66 earnings per share. The business's revenue was up 43.3% on a year-over-year basis. As a group, sell-side analysts anticipate that Valero Energy Corporation will post 57.42 EPS for the current year.

Valero Energy Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Monday, December 21st. Shareholders of record on Tuesday, November 24th will be paid a dividend of $1.20 per share. This represents a $4.80 dividend on an annualized basis and a yield of 1.2%. The ex-dividend date of this dividend is Tuesday, November 24th. Valero Energy's dividend payout ratio (DPR) is presently 10.80%.

Hedge Funds Weigh In On Valero Energy

Several hedge funds have recently modified their holdings of VLO. Bank of America Corp DE increased its position in Valero Energy by 11.4% in the 1st quarter. Bank of America Corp DE now owns 5,033,310 shares of the oil and gas company's stock worth $1,243,630,000 after purchasing an additional 516,975 shares during the last quarter. Bank of New York Mellon Corp lifted its holdings in shares of Valero Energy by 9.4% during the 1st quarter. Bank of New York Mellon Corp now owns 2,969,320 shares of the oil and gas company's stock valued at $733,660,000 after buying an additional 254,604 shares during the last quarter. Arrowstreet Capital Limited Partnership lifted its holdings in shares of Valero Energy by 18.4% during the 1st quarter. Arrowstreet Capital Limited Partnership now owns 2,842,339 shares of the oil and gas company's stock valued at $702,285,000 after buying an additional 442,177 shares during the last quarter. Amundi lifted its holdings in shares of Valero Energy by 45.3% during the 1st quarter. Amundi now owns 2,584,976 shares of the oil and gas company's stock valued at $638,695,000 after buying an additional 806,018 shares during the last quarter. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC grew its stake in shares of Valero Energy by 33.9% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 2,058,341 shares of the oil and gas company's stock valued at $536,074,000 after buying an additional 520,642 shares in the last quarter. 78.69% of the stock is currently owned by institutional investors and hedge funds.

Valero Energy Company Profile

Valero Energy Corporation is an international energy company headquartered in San Antonio, Texas. The company's primary business is refining and marketing transportation fuels, including gasoline, diesel, jet fuel and other products used by commercial, industrial and consumer customers.

Valero operates refineries in the United States, Canada and the United Kingdom. Its refining operations also produce asphalt, petrochemical feedstocks and other petroleum-based products. The company markets fuel through wholesale channels and branded retail networks, including Valero, Beacon and Shamrock-branded locations.

In addition to conventional refining, Valero has businesses focused on renewable fuels.

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