Why I'm Rating Valero Energy a Strong Buy
- Felix Ouma
- 22 hours ago
- 9 min read
Updated: 8 hours ago
Summary
Valero had a very strong first quarter of 2026, with net income attributable to stockholders of $1.3 Bn and refining operating income of $1.8 Bn. The latest quarter showed that the company can still earn very well when refining conditions improve and management executes cleanly.
The core of the story is still the refining business, but Valero is no longer just a pure refining call. Renewable diesel and ethanol both improved in the quarter, which gives the company more ways to earn cash than many investors may assume.
Valero runs a large, complex coastal refining system with feedstock flexibility, export reach, and a long record of low cash operating costs. That kind of platform matters when commodity markets become more volatile.
On valuation, Valero still looks attractive. Its FWD Non-GAAP EV/EBITDA of 6.16x and FWD P/E of 9.33x are below Marathon Petroleum and Phillips 66, while its FWD PEG of 0.19x looks much better than HF Sinclair. In other words, the stock is not priced like a premium stock even though it has many of those qualities.
