Oil & Gas Refining & Marketing · NYSE
Current Price
$251.30
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Valero Energy Corporation with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Valero Energy Corporation manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Refining, Renewable Diesel, and Ethanol. It produces conventional, premium, and reformulated gasolines; gasoline meeting the specifications of the California Air Resources Board (CARB); diesel fuels, and low-sulfur and ultra-low-sulfur diesel fuels; CARB diesel; other distillates; jet fuels; blendstocks; and asphalts, petrochemicals, lubricants, and other refined petroleum products, as well as sells lube oils and natural gas liquids. As of December 31, 2021, the company owned 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day; and 12 ethanol plants with a combined ethanol production capacity of approximately 1.6 billion gallons per year. It sells its refined products through wholesale rack and bulk markets; and through approximately 7,000 outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company also produces and sells ethanol, dry distiller grains, syrup, and inedible corn oil primarily to animal feed customers. In addition, it owns and operates crude oil and refined petroleum products pipelines, terminals, tanks, marine docks, truck rack bays, and other logistics assets; and owns and operates a plant that processes animal fats, used cooking oils, and inedible distillers corn oils into renewable diesel. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.
ROIC (TTM)
6.9%
ROE (TTM)
9.9%
FCF Yield
7.19%
Based on trailing twelve-month data, VLO shows a free cash flow per share of N/A and a ROIC of 6.9%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 7.19% are important context metrics when evaluating VLO's stock valuation relative to peers.
The intrinsic value of VLO depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether VLO is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $251.30. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Valero Energy Corporation: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Oil & Gas Refining & Marketing industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting VLO's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Valero Energy Corporation, this means projecting how much free cash flow the Oil & Gas Refining & Marketing will produce over the next 5-10 years, then discounting those amounts to today's dollars. VLO's ROIC of 6.9% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For VLO, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
