VLO Fair Value Estimate
$115.8050.5% overvalued
Blended fair value estimate based on DCF, Graham Number, and earnings-based models.
Valero Energy Corp
Exchange: NYSESector: EnergyIndustry: Oil & Gas Refining & Marketing
Valero Energy Corporation, through its subsidiaries (collectively, Valero), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and sells its products primarily in the United States (U.S.), Canada, the United Kingdom (U.K.), Ireland and Latin America. Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day. Valero is a joint venture member in Diamond Green Diesel Holdings LLC, which produces low-carbon fuels including renewable diesel and sustainable aviation fuel (SAF), with a production capacity of approximately 1.2 billion gallons per year in the U.S. Gulf Coast region. See the annual report on Form 10-K for more information on SAF. Valero also owns 12 ethanol plants located in the U.S. Mid-Continent region with a combined production capacity of approximately 1.7 billion gallons per year. Valero manages its operations through its Refining, Renewable Diesel, and Ethanol segments.
Did you know?
VLO's revenue grew at a 2.1% CAGR over the last 6 years.
Current Price
$233.83
-0.23%GoodMoat Value
$115.80
50.5% overvaluedProfile
Valuation (TTM)
Market Cap$71.32B
P/E30.37
EV$78.34B
P/B3.01
Shares Out305.01M
P/Sales0.58
Revenue$122.69B
EV/EBITDA11.33
Valero Energy Corp (VLO) Valuation
GoodMoat Analysis
Valero's current price is deeply unfavourable from a value investing perspective, trading at a significant premium to its estimated intrinsic value. The stock's P/E multiple is elevated relative to its historical context and the sector, while its fundamental quality and growth profile do not justify the premium.
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The current price of $234.54 is more than double the GoodMoat Target of $115.80, implying a negative margin of safety of approximately -103%. According to the GoodMoat Valuation Assessment bands, this places the stock in the 'Unfavourable' category, as it is trading at a substantial premium to its estimated fair value. The forward P/E of 30.5x is high for a company in the cyclical refining sector, especially one exhibiting negative revenue growth (-2.1% YoY) and a low profit margin of 1.9%. This multiple is likely at the high end of its historical range and appears expensive compared to typical sector averages. While the free cash flow yield of 5.6% is a positive sign, it is insufficient to offset the extreme overvaluation indicated by the DCF-based target. For a value investor seeking a margin of safety, the current price does not offer an attractive entry point, as it requires near-perfect future execution and favourable commodity cycles to justify its valuation. The stock's quality, as suggested by its modest ROE of 9.9% and negative growth, does not support such a premium multiple. Analysis based on data as of 2024-05-15.
VLO Valuation Metrics
FCF$4.01B
FCF Growth Rate5.56%
EPS Growth (CAGR)-0.52%
WACC10.00%
Fair Value Models
Graham Number, PEG-based, and Earnings-based models
View Fair Value →VLO Valuation & Fair Value Analysis
Valero Energy Corp (VLO) valuation analysis using multiple fair value methodologies. GoodMoat calculates a blended fair value target using discounted cash flow (DCF) analysis, the Graham Number, and earnings-based valuation models.
The GoodMoat Fair Value target for Valero Energy Corp is $115.80. The current stock price is $233.83, suggesting the stock is 101.9% overvalued.
The price-to-earnings (P/E) ratio is 30.37. Price-to-book ratio is 3.01. Price-to-sales ratio is 0.58. Enterprise value to EBITDA is 11.33. PEG ratio is 0.10.
GoodMoat's valuation models include the Graham Number (based on EPS and book value), an earnings-based model (discounted future EPS), and a PEG-adjusted valuation. The three models are averaged to produce a blended fair value estimate. Use these tools alongside the DCF calculator and reverse DCF to form a comprehensive view of Valero Energy Corp's intrinsic value.