Valero Energy Corporation (VLO) Stock Valuation — PE Analysis
Oil & Gas Refining & Marketing · NYSE
Current Price
$258.67
PE Ratio (TTM)
18.3x
Intrinsic Value
$484.7
+46.6% margin of safety
COMPETITIVE MOAT
↑Refining Margin Strength
Tight global refining capacity and low fuel inventories allow Valero to maintain strong refining margins, even with elevated crude oil prices. This pricing power is a key advantage.
↑Renewable Fuels Expansion
Valero's strategic investment in renewable diesel, SAF, and ethanol positions it to capitalize on growing demand for cleaner transportation fuels. This diversification offers future cash flow potential.
↑Operational Scale and Efficiency
As a large-scale refiner, Valero benefits from economies of scale and operational efficiencies. This allows for cost advantages and consistent production.
INVESTMENT RISKS
↓Geopolitical Volatility
Fragile ceasefires and geopolitical tensions, like the Iran situation, can lead to volatile oil prices. This volatility can impact input costs and refining margins unpredictably.
↓Regulatory and Environmental Shifts
Increasingly stringent environmental regulations and a push towards electrification could impact long-term demand for traditional refined products. Valero must adapt to these evolving policies.
↓Competition and Capacity Additions
While current capacity is tight, future additions by competitors could pressure refining margins. Valero faces ongoing competition in a cyclical industry.
Base case
VLO base case PE valuation
A base case PE valuation for VLO estimates a fair value of about $484.7 per share, against a current price of $258.67. The model assumes 20.0% annual earnings growth, a 18x target PE multiple, and a 10% discount rate.
Intrinsic Value
$484.7
Margin of safety
+46.6%
Expected annual return
+13.4%
Base case assumptions: 20.0% annual earnings growth, 18x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the VLO PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Valero Energy Corporation respond.
Open PE Calculator for VLOCompany Overview
Valero Energy Corporation functions as a global producer and marketer of transportation fuels and petrochemicals, with operations spanning the United States, Canada, the United Kingdom, Ireland, and other international territories. The company organizes its business across three primary divisions: Refining, Renewable Diesel, and Ethanol. Its Refining segment generates a wide array of products, including various types of gasoline (conventional, premium, reformulated, and California Air Resources Board-compliant), diverse diesel fuels (low-sulfur, ultra-low-sulfur, and CARB diesel), jet fuels, blendstocks, asphalts, petrochemicals, and lubricants. This division also handles the sale of lube oils and natural gas liquids. As of the end of 2021, Valero managed 15 petroleum refineries, boasting a combined daily processing capacity of approximately 3.2 million barrels of crude oil. The Ethanol division comprises 12 plants, capable of producing around 1.6 billion gallons of ethanol annually. These facilities also yield co-products such as dry distiller grains, syrup, and inedible corn oil, which are largely supplied to animal feed markets. Valero distributes its refined goods through wholesale rack and bulk channels, in addition to approximately 7,000 branded retail stations operating under names like Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco. Furthermore, Valero contributes to renewable energy production by owning and operating a facility dedicated to converting animal fats, used cooking oils, and inedible distillers corn oils into renewable diesel. Supporting its extensive operations, the company maintains a comprehensive logistics network that includes crude oil and refined product pipelines, storage terminals, tanks, marine docks, and truck rack bays. Originally established in 1980 as Valero Refining and Marketing Company, the firm adopted its current name, Valero Energy Corporation, in August 1997. Its corporate headquarters are situated in San Antonio, Texas.
Financial Metrics — VLO PE Stock Valuation Data
PE Ratio (TTM)
18.3x
PEG Ratio
0.05
Earnings Yield
5.46%
ROE (TTM)
17.6%
Revenue/Share (TTM)
$423.38
Dividend Yield
1.80%
Debt/Equity
0.48x
Frequently Asked Questions
What is the PE ratio of VLO?
The trailing twelve-month PE ratio of VLO reflects how much investors pay per dollar of Valero Energy Corporation's earnings. This metric is most useful when compared to Oil & Gas Refining & Marketing peers and the company's own historical range.
Is VLO overvalued based on PE ratio?
VLO's PE of 18.3x combined with a PEG ratio of 0.05 provides a growth-adjusted perspective. A PEG below 1.0 suggests VLO may be undervalued relative to its earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Oil & Gas Refining & Marketing, a DCF analysis may be more appropriate.
How do I value VLO stock using PE ratio?
To value Valero Energy Corporation using PE: (1) Compare the current PE (18.3x) against the Oil & Gas Refining & Marketing median to assess relative pricing, (2) check the PEG ratio (0.05) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of VLO?
VLO's PEG ratio is 0.05, calculated by dividing the PE ratio (18.3x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for VLO stock valuation?
PE ratio gives a quick relative read — how VLO is priced versus Oil & Gas Refining & Marketing peers. DCF provides an absolute value based on projected free cash flows. For VLO, with a strong ROE of 17.6%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See VLO DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Energy valuationsP/E and DCF value VLO with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.