Valero Energy Corp. (VLO): Despite Outperformance, Still Constructive on Shares Given Supply-Side Macro and FCF Algorithm

Research evidence excerpt

Valero Energy Corp. (VLO): Despite Outperformance, Still Constructive on Shares Given Supply-Side Macro and FCF Algorithm

Equity Research

3 August 2026 | 8:56PM EDT

Valero Energy Corp. (VLO): Despite Outperformance, Still Constructive

on Shares Given Supply-Side Macro and FCF Algorithm

The Positives. Following 2Q26 earnings results, we continue to view the stock as a Neil Mehta

+1(212)357-4042 | neil.mehta@gs.com

key beneficiary of tighter refining fundamentals given the company’s premium asset Goldman Sachs & Co. LLC

portfolio, advantaged Gulf Coast positioning, and track record of quarterly Alexa Petrick Breno

execution. In addition, we note the company reported greater-than-anticipated +1(917)343-9472alexa.breno@gs.com|

renewable diesel and ethanol earnings results, which we expect will be supportive Goldman Sachs & Co. LLC

Josiah Knightfor cash flow generation in the near-term. As a result, we highlight the company’s +1(212)357-9806 |

compelling capital returns profile where we see VLO trading at a ~10%/~9% yield via josiah.knight@gs.comGoldman Sachs & Co. LLC

buybacks and dividends in 2026/2027, respectively. Lydia Gould

+1(212)357-9778 | lydia.gould@gs.com

The Challenges. We are mindful of YTD outperformance where in many of our Goldman Sachs & Co. LLC

conversations with investors, relative valuation remains a key area of pushback.

Moreover, we also monitor for updates from management around the upcoming FCC

turnaround project at the St. Charles refinery and the potential earnings

implications.

Our View. For VLO (updated PT of $365/sh), we highlight the stock’s leverage to the

elevated refining margin backdrop given the company’s balance sheet strength,

low-cost operations, crude slate optionality, and track record of execution.