Earnings surge and buyback completion put Valero Energy in focus

Valero Energy (VLO) is back on investors’ radar after its latest quarterly report and an update on a large share repurchase program that has now reached completion.

The company reported second quarter sales of US$42,816 million and net income of US$3,720 million, with earnings per share from continuing operations at US$12.62 basic and diluted.

For the first half of 2026, Valero Energy reported sales of US$73,472 million and net income of US$4,983 million. Basic earnings per share from continuing operations was US$16.79 and diluted earnings per share was US$16.78.

Alongside these earnings, Valero Energy disclosed that from April 1 to June 30, 2026 it repurchased 9,007,226 shares for US$2,261.55 million, representing 3.03% of its stock.

Since announcing the buyback on September 15, 2023, the company has now repurchased a total of 48,114,319 shares for US$8,418.8 million, which represents 15.33% of its outstanding shares.

Valero Energy’s latest earnings and buyback update have come alongside strong share price momentum, with a 90.52% year to date share price return and a 144.08% 1 year total shareholder return that suggest investors are reassessing both growth prospects and risk.

If Valero Energy’s move has you rethinking your energy exposure, this can be a good moment to scan other power related plays through 37 power grid technology and infrastructure stocks

Valero Energy now combines sizeable earnings, a completed US$8.4b buyback and a share price that has run hard. Is this still a strong business available at a fair price, or has the recent move already done the heavy lifting?

Most Popular Narrative: 17.6% Overvalued

The most followed narrative on Valero Energy pegs fair value around $267.83 per share, which sits below the recent $314.95 close. That gap hinges on how long current refining strength and cash generation can last.

The analysts have a consensus price target of $267.83 for Valero Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $312.0, and the most bearish reporting a price target of just $190.0.

The narrative leans on earnings staying healthy, even while revenue drifts lower. Margins, future P/E, and shrinking share count do most of the heavy lifting. It is worth examining which assumptions really drive that gap between price and fair value.

Result: Fair Value of $267.83 (OVERVALUED)

However, risks around potential asset impairments and high operating costs, especially in renewable diesel, could quickly challenge the current optimism around Valero Energy.

Another view on Valero Energy valuation

The popular narrative pegs Valero Energy as 17.6% overvalued at $267.83 fair value, yet the SWS DCF model points the other way. On those cash flow assumptions, the stock at $314.95 sits about 2.4% below an estimated $322.61 fair value, which frames only a modest margin either way.

That leaves you weighing two very different stories: one anchored in earnings multiples and one in long term cash flows, and deciding which better fits how you think Valero Energy will actually perform.

Next Steps

If this mix of strong recent figures and valuation debate around Valero Energy feels finely balanced, take a closer look at the numbers and decide where you stand for yourself. To weigh both sides of the story quickly and see what stands out most for you, review the 3 key rewards and 2 important warning signs.

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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.