• If you are wondering whether Valero Energy's current share price still makes sense, it helps to step back and look at what the recent performance and valuation numbers are really telling you.
• The stock recently closed at US$246.87, with returns of 4.7% over 7 days, 2.2% over 30 days, 49.3% year to date, 113.7% over 1 year, 152.6% over 3 years and 264.6% over 5 years.
• Recent price action has kept Valero Energy on the radar for investors who are trying to connect the share price with underlying fundamentals. Evergreen interest in large US energy names, along with ongoing attention on refining capacity and fuel demand, continues to shape how the market is thinking about companies like Valero.
• Valero Energy currently has a valuation score of 4/6. The next sections will walk through what different valuation methods say about that number and point toward a broader way to think about value that ties everything together by the end of the article.

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

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and then discounting those cash flows back to a present value using a required rate of return.

For Valero Energy, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The latest twelve month free cash flow is about $5.0b. Analysts provide explicit forecasts for the next few years, such as $9.2b in 2026, $6.4b in 2027 and $5.8b in 2028, with later years such as 2030 at $4.8b. Beyond the analyst horizon, Simply Wall St extrapolates additional years to complete the 10 year path.

After discounting each of these projected cash flows back to today, the model arrives at an estimated intrinsic value of about $347.83 per share. Compared with the recent share price of $246.87, the DCF output indicates that, under this set of assumptions, the stock may be trading at a discount of about 29.0% to the model’s estimated value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Valero Energy is undervalued by 29.0%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Valero Energy Price vs Earnings

For a profitable company, the P/E ratio is a useful shorthand because it links what you pay for the stock to the earnings the business is currently generating. It helps you see how many dollars investors are willing to pay today for each dollar of earnings.

What counts as a normal or fair P/E usually reflects how the market views the company’s growth potential and risk profile. Higher expected growth and lower perceived risk tend to support a higher multiple, while slower growth or higher risk often align with a lower one.

Valero Energy is trading on a P/E of 17.58x. That sits above the Oil and Gas industry average of 14.55x, but below the peer group average of 21.68x. Simply Wall St’s Fair Ratio for Valero, which estimates a P/E of 21.23x, is designed to go further than simple comparisons.

This Fair Ratio incorporates factors such as earnings growth, profit margins, industry characteristics, market cap and company specific risks. Because it adjusts for these elements, it can provide a more tailored view than looking only at industry or peer averages.

Comparing the current P/E of 17.58x with the Fair Ratio of 21.23x suggests Valero Energy is trading below that model implied level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Valero Energy Narrative

Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in, giving you a simple story that connects your view on Valero Energy to a set of revenue, earnings and margin assumptions, a fair value, and finally a clear comparison between that fair value and the current price.

A Narrative on Simply Wall St is your version of the Valero Energy story, written in numbers and words together. You spell out what you think happens to revenues, profit margins and earnings, and the platform then turns that into an implied fair value that you can line up against today’s share price.

These Narratives live inside the Community page on Simply Wall St. They are updated automatically when fresh news, earnings or analyst estimates arrive, and make it easy to see how different views on the same company can sit side by side in a structured way.

For Valero Energy, one investor might build a Narrative closer to the higher analyst fair value of about US$265.11, while another might lean toward the lower fair value of about US$170.00. By comparing each Narrative’s fair value to the current price, each investor can decide whether that story suggests Valero Energy is priced attractively or looks expensive based on their own assumptions.

For Valero Energy however we'll make it really easy for you with previews of two leading Valero Energy Narratives:

Fair value in this bullish narrative: US$247.33 per share.

At the recent price of US$246.87, this view implies Valero Energy is about 0.19% below that fair value.

Revenue growth assumption: 2.02% decline.

• Analysts in this narrative expect profit margins to widen over the next few years, with earnings rising to US$5.7b and earnings per share of US$22.87 by around April 2029.
• The view assumes ongoing support from optimization projects, a solid balance sheet, and capital returns, while also factoring in buybacks that are expected to reduce the share count each year.
• Risks focus on asset impairments, regulatory changes, renewable segment pressure, and higher operating costs, which could challenge the thesis if they weigh on margins and cash flow more than expected.

Fair value in this more cautious narrative: US$185.51 per share.

At the recent price of US$246.87, this view implies Valero Energy is about 33.0% above that fair value.

Revenue growth assumption: 9.0%.

• This narrative places Valero Energy alongside other large energy names and sees the shares as pricing in a lot of good news already, with valuation metrics sitting well above the author’s fair value estimate.
• The author points to solid free cash flow and dividend support but pairs that with targets and stop loss levels that reflect concern about earnings variability and potential pressure on profit margins.
• Overall, it frames Valero Energy as an income and cash flow story that may already trade at a premium to what the underlying fundamentals justify in this particular model.

If these previews help you clarify where you lean on Valero Energy, the full narratives let you inspect the exact assumptions behind each stance and decide which story feels closer to your own expectations.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Valero Energy on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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

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.