Valero Energy (VLO) Stock Forecast & Price Target

Valero Energy's robust operational capacity, with 15 refineries and a total throughput of 3.2 million barrels per day, positions the company favorably amidst improving demand and low inventories, which enhance its competitive stance in the refining market. The anticipated increase in shareholder returns, particularly through accelerated buybacks, combined with a strong earnings power supported by tight global capacity and favorable cost structures, underpins a positive financial outlook. Additionally, the company's investments in ethanol and renewable diesel further diversify its revenue streams and align with growing demand for cleaner energy solutions.

Valero Energy's stock outlook is negatively impacted by revised lower earnings per share (EPS) and EBITDA estimates, dropping from $8.41 to $7.28 per share and from $4,715 million to $4,182 million, primarily due to headwinds in refining capture and Diamond Green Diesel (DGD) margins. Additionally, the company's revised throughput estimates have decreased from 3.371 million gallons per day to 2.98 million gallons per day, further exacerbating the challenges posed by downtime at DGD and leading to potential increased repair expenses. Historical volatility in refining margins, coupled with risks including narrower product cracks and diminished environmental credit market performance, contributes to the negative sentiment surrounding Valero’s operational outlook.