Is It Too Late To Consider Valero Energy (VLO) After Strong 1-Year Share Price Gains?

Simply Wall St

Mon, February 16, 2026 at 8:10 AM GMT+9 5 min read

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If you are wondering whether Valero Energy at around US$200 per share still offers value, or if most of the opportunity is already priced in, this article is for you.

The stock has been active recently, with a 1.2% decline over the last 7 days, a 9.1% gain over 30 days, and returns of 21.1% year to date and 52.3% over 1 year, which may be changing how investors think about its risk and reward.

Recent news flow around US refiners has focused on supply capacity, regulatory developments, and product demand trends. This gives investors more data points to weigh against Valero's share price moves. For a business that sits at the heart of fuel production, these updates can quickly influence how the market prices the stock.

Simply Wall St currently gives Valero Energy a valuation score of 2 out of 6. We will unpack this using different valuation approaches, and then wrap up with a way to look at valuation that goes beyond any single model.

Valero Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Valero Energy Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting those back to today’s value using a required return. It is essentially asking what those future cash flows are worth in today’s dollars.

For Valero Energy, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $3.99b. Analysts provide explicit forecasts for the next few years, and Simply Wall St extends those out to 10 years, with projected free cash flow of around $4.53b in 2030. The discounted values of these yearly cash flows, from 2026 through 2035, are then summed and adjusted for equity to arrive at an intrinsic value estimate.

This DCF produces an estimated fair value of about $349.88 per share. Compared with the current share price of around $200, the model implies the stock trades at a 42.8% discount, which points to a meaningful gap between price and this cash flow based estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Valero Energy is undervalued by 42.8%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

VLO Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Valero Energy.

Story Continues  

Approach 2: Valero Energy Price vs Earnings

For a profitable company like Valero Energy, the P/E ratio is a useful way to see what investors are currently willing to pay for each dollar of earnings. It gives you a quick sense of how the market is weighing the company’s earnings power against alternatives.

A “normal” or “fair” P/E typically reflects what investors think about two things: how quickly earnings might change over time and how risky those earnings are. Higher expected growth and lower perceived risk usually justify a higher P/E, while lower growth expectations or higher risk tend to point to a lower P/E.

Valero Energy currently trades on a P/E of about 26.0x. That is above the Oil and Gas industry average P/E of around 14.5x and also above the peer average of about 21.2x. Simply Wall St’s proprietary Fair Ratio for Valero’s P/E is 24.0x, which is an estimate of what the P/E “should” be given factors such as its earnings profile, margins, industry, size and risk characteristics.

The Fair Ratio can be more helpful than a simple peer or industry comparison because it adjusts for company specific factors rather than treating all refiners or all Oil and Gas names as interchangeable. Here, Valero’s actual P/E of 26.0x sits above the Fair Ratio of 24.0x, which points to the shares looking somewhat expensive on this earnings based view.

Result: OVERVALUED

NYSE:VLO P/E Ratio as at Feb 2026

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Upgrade Your Decision Making: Choose your Valero Energy Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simple stories you create about a company that tie your view of its business to specific forecasts for revenue, earnings and margins. These then connect to a fair value that you can compare with the live share price on Simply Wall St’s Community page, where Narratives are kept up to date when new news or earnings arrive. For Valero Energy, one investor on the platform might build a Narrative that supports a fair value of about US$185.51 per share, while another, using more optimistic assumptions, lands closer to about US$198.22 per share. Each can then decide for themselves whether the current price looks above or below their own fair value line.

Do you think there’s more to the story for Valero Energy? Head over to our Community to see what others are saying!

NYSE:VLO 1-Year Stock Price Chart

_ 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._

Companies discussed in this article include VLO.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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