Valero Energy (VLO) Advances While Market Declines: Some Information for Investors

Valero Energy (VLO) closed up 1.61% at $134.06, outperforming the S&P 500's decline, though the stock has underperformed both the S&P 500 and its sector over the past month. Valero's upcoming earnings report on July 24, 2025, is projected to show a significant year-over-year decline in both EPS (down 38.75% to $1.66) and revenue (down 19.16% to $27.88 billion); full-year estimates also indicate a decrease in earnings and revenue. Despite a recent increase in the Zacks Consensus EPS estimate, Valero holds a Zacks Rank of #3 (Hold) and trades at a premium to its industry based on Forward P/E and PEG ratios.

Analysis

Valero Energy (VLO) closed the most recent trading day at $134.06, a 1.61% increase that outpaced the S&P 500's 0.27% decline. However, this daily gain contrasts with its one-month performance, where VLO stock fell 2.35%, underperforming both the Oils-Energy sector's 4.61% gain and the S&P 500's 6.9% appreciation. The market anticipates Valero's earnings report on July 24, 2025, with projections indicating significant headwinds: earnings per share (EPS) are forecasted at $1.66, representing a 38.75% year-over-year decrease, while revenue is expected to be $27.88 billion, a 19.16% decline from the year-ago quarter. Full-year estimates also signal a downturn, with Zacks Consensus Estimates projecting earnings of $6.1 per share (a 28.07% decrease) and revenue of $115.97 billion (a 10.71% decrease) compared to the previous year. Despite these challenging forecasts, the Zacks Consensus EPS estimate for VLO has risen by 2.9% over the past month, suggesting some positive near-term revisions by analysts. Valero currently holds a Zacks Rank of #3 (Hold). From a valuation perspective, VLO trades at a forward P/E ratio of 21.62, a premium to its industry's average of 16.7, and a PEG ratio of 2.33, also above the industry average of 1.55. The Oil and Gas - Refining and Marketing industry, to which VLO belongs, ranks in the bottom 37% of over 250 industries tracked by Zacks, with an Industry Rank of 155, indicating potential broader challenges within the sector.

Key Decisions for Investors

• Investors should exercise caution given the substantial projected year-over-year declines in Valero's earnings and revenue for both the upcoming quarter and the full fiscal year.
• The forthcoming earnings release on July 24, 2025, warrants close attention, particularly for any deviation from the consensus estimates or changes in management's outlook, especially in light of the recent 2.9% upward revision in the consensus EPS estimate.
• Valero's current valuation, with a forward P/E of 21.62 and a PEG ratio of 2.33, represents a premium to its industry; this, combined with the relatively low ranking of the Oil and Gas - Refining and Marketing industry, suggests a careful assessment of risk versus reward is prudent before initiating or adding to positions.