Valero Energy: Earnings Surged, but the Strong Buy Has Run Its Course
RATING: HOLD (downgraded from Strong Buy) | TARGET: $360 | PRICE: $387.61 as of September 30, 2026 | PRICE DOWNSIDE: 7.1%.
Summary
Q2 adjusted EPS reached $12.54 against $10.11 consensus, while revenue of $44.48 Bn beat consensus by $5.01 Bn. Refining operating income rose to $4.47 Bn.
The operating thesis strengthened: throughput held near 3.0 MMbpd, renewable diesel and ethanol profits accelerated, adjusted operating cash flow reached $4.5 Bn, and net debt to capital fell to 11%.
The valuation thesis weakened after the shares gained 56.8% from the original article's $247.12 purchase price to $387.61. Consensus also expects 2027 EPS to fall 20% from the 2026 level as margins normalize.
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