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    How a Profit Surge and Bigger Cash Returns At Valero Energy (VLO) Has Changed Its Investment Story

    Simply Wall St·07/31/2026 10:17:10
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    • Valero Energy Corporation has reported past second-quarter 2026 results showing sales of US$44.48 billion and net income of US$3.72 billion, with basic earnings per share from continuing operations of US$12.62 compared with US$2.28 a year earlier.
    • These results reflect a very large year-on-year increase in profitability over both the quarter and first half of 2026, supported by strong refining, renewable diesel, and ethanol contributions alongside continued dividends and share buybacks.
    • We will now examine how this surge in quarterly earnings and cash returns might reshape Valero’s previously balanced investment narrative.

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    Valero Energy Investment Narrative Recap

    To own Valero today, you need to believe its large refining and low‑carbon fuels platform can keep converting volatile margins into solid cash returns. The latest earnings surge highlights that refining and renewable fuels are both contributing meaningfully, which supports the near term cash return story. However, it does not remove key risks around policy shifts and potential costs tied to West Coast operations, which could still weigh on future profitability if they intensify.

    The reaffirmed quarterly dividend of US$1.20 per share is the announcement that stands out alongside these earnings. It reinforces Valero’s pattern of returning a sizable share of cash to shareholders through dividends and buybacks, which has been a major short term catalyst for the stock. At the same time, this commitment interacts with the risk that weaker refining or renewable fuel margins could pressure cash generation while regulatory and project spending remain significant.

    Yet behind these strong results, investors should be aware of the unresolved policy and West Coast regulatory risks that could...

    Read the full narrative on Valero Energy (it's free!)

    Valero Energy's narrative projects $112.7 billion revenue and $4.7 billion earnings by 2029. This assumes revenues decline by 1.5% per year and requires an earnings increase of about $0.5 billion from $4.2 billion today.

    Uncover how Valero Energy's forecasts yield a $267.83 fair value, a 14% downside to its current price.

    Exploring Other Perspectives

    VLO 1-Year Stock Price Chart
    VLO 1-Year Stock Price Chart

    Some of the most optimistic analysts were already assuming earnings could reach about US$8.2 billion by 2029, which is far more upbeat than consensus, but this new earnings step change and the risk that heavy crude sourcing advantages could narrow both suggest that those projections and the more cautious views might need a fresh look.

    Explore 4 other fair value estimates on Valero Energy - why the stock might be worth as much as 73% more than the current price!

    Decide For Yourself

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.