• If you are wondering whether Valero Energy stock still offers value after a strong run, the next sections will walk through what the current price might be implying.
• The stock last closed at US$247.16, with returns of 49.5% year to date and 84.0% over the past year. However, the price has pulled back, declining 4.3% over the past week and 1.4% over the past month.
• Recent headlines around Valero Energy have focused on its role as a large US refiner and fuels supplier, and on how refining capacity trends and product demand are shaping sentiment toward the sector. These developments help explain why the stock has seen strong multi year returns of 136.0% over three years and 264.5% over five years, alongside shorter term price weakness.
• Valero Energy currently holds a valuation score of 3/6. The rest of this article will compare what different valuation methods say about the stock, before finishing with a broader way to think about valuation beyond the numbers alone.

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

A Discounted Cash Flow, or DCF, model estimates what Valero Energy stock might be worth by projecting future cash flows and discounting them back to today using a required return. It focuses on the cash the company could generate for shareholders rather than short term market moves.

Valero Energy has last twelve month free cash flow of about $5.5b. The 2 Stage Free Cash Flow to Equity model used here relies on analyst forecasts where available, then extends those trends. For example, projected free cash flow in 2026 is $10.1b and in 2030 is $4.8b, with later years extrapolated by Simply Wall St rather than based on explicit analyst estimates.

Combining these projections and discounting them gives an estimated intrinsic value of $407.58 per share. Compared with the recent share price of $247.16, the model suggests the stock is trading at a 39.4% discount based on this cash flow view alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Valero Energy is undervalued by 39.4%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Approach 2: Valero Energy Price vs Earnings

For a profitable company like Valero Energy, the P/E ratio is a useful way to relate what you pay for the stock to the earnings it currently generates. Investors usually expect higher P/E ratios when they see stronger earnings growth potential or lower perceived risk, and lower P/E ratios when growth expectations are more modest or risks are higher.

Valero Energy currently trades on a P/E of 17.5x. This sits above the Oil and Gas industry average P/E of about 13.0x and above the peer group average of 14.8x. Simply Wall St also calculates a proprietary “Fair Ratio” for the stock of 18.3x, which is an estimate of what the P/E might be based on factors such as earnings growth characteristics, profit margins, industry, market cap and company specific risks.

This Fair Ratio can offer a more tailored reference point than a simple comparison with peers or the broad industry, because it adjusts for differences in growth, risk and profitability rather than assuming all companies should trade on the same multiple. With Valero Energy’s current P/E of 17.5x sitting slightly below the 18.3x Fair Ratio, the shares appear modestly undervalued on this metric.

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 what the current price of Valero Energy might be implying. Narratives are introduced here as simple stories that tie your view of the company to a set of assumptions for future revenue, earnings and margins, which then flow into a Fair Value that can be compared with today’s price.

On Simply Wall St’s Community page, Narratives let you set out that story in a structured way, link it to a forecast and a Fair Value, then see at a glance whether your view suggests the Valero Energy stock is above or below what you think it is worth, which can help you decide whether to act or wait without needing to build a spreadsheet.

These Narratives update as new information arrives, for example when fresh earnings or news are added, so your Fair Value view stays connected to the latest data rather than a static one off calculation.

For Valero Energy, one investor might align with a more bullish Narrative that assumes revenue around US$116.5b, earnings of US$7.0b by 2029 and a Fair Value near US$265.11. Another might lean toward a more cautious Narrative built around revenue of US$106.7b, earnings of US$2.7b and a Fair Value of US$170.00. The Community page lets you compare these side by side and decide which story you find more reasonable.

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

Fair value: US$259.47 per share

Implied discount to this fair value: about 4.7% below the narrative fair value

Revenue growth assumption: revenue declines about 1.27% per year

• Analysts in this Narrative expect revenue to ease slightly each year, while profit margins rise from 3.6% to 5.4%, lifting earnings to about US$6.1b by 2029.
• The view assumes Valero Energy trades on a future P/E of 13.6x, with share count declining about 4.4% per year and a discount rate of about 7.1% applied to bring those cash flows back to today.
• Analysts overall cluster around a fair value close to the recent price, and this camp treats the stock as roughly in line with its underlying earnings path, leaving room for readers to stress test the assumptions for margins, regulation and refining fundamentals.

Fair value: US$170.00 per share

Implied premium to this fair value: about 45.4% above the narrative fair value

Revenue growth assumption: revenue declines about 2.72% per year

• This more cautious Narrative assumes revenue contracts at a faster pace, with only a modest improvement in profit margins to 2.5% and earnings of about US$2.7b by 2029.
• It requires a higher future P/E of 19.9x to support the fair value, even as it builds in share count reductions and a discount rate just under 7%, and places more weight on risks around throughput, crude quality spreads and renewable policy.
• Under this view, the current Valero Energy share price sits well above the implied fair value, so readers are encouraged to scrutinize whether assumptions on utilization, margins and regulation feel too cautious or appropriately conservative given their own expectations.

Ultimately, the key question for Valero Energy stock is which story feels closer to how you think refining margins, regulation, and capital returns will play out over the next few years, and whether the current price still lines up with that view when you run the numbers through to a fair value.

To see how these summaries connect with the underlying forecasts, risks, and valuation work, it is worth reviewing the full set of community narratives for Valero Energy alongside the detailed company data.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.