Valero Energy (VLO) Is Up 8.4% After Strong Q3 Profit and Benicia Closure Announcement – Has the Bull Case Changed?

• Valero Energy recently reported robust third-quarter 2025 results, with net income rising to US$1.1 billion and continued large-scale share buybacks totaling US$4.57 billion since September 2023. The company also advanced major optimization projects and announced the planned closure of its Benicia refinery by April 2026 following unsuccessful talks with California officials.
• An important insight is that Valero maintained high refinery utilization rates and strong shareholder returns amid industry challenges, underlining the competitive advantage refiners have recently experienced versus oil producers.
• We'll examine how Valero's strong profit growth and operational investments influence its investment narrative and long-term outlook.

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Valero Energy Investment Narrative Recap

To invest in Valero Energy today, you need to believe in the company’s ability to generate solid profits and shareholder value, even as it faces regulatory obstacles and closure costs from the Benicia refinery. The recent strong third-quarter earnings and large-scale share buybacks support this view, with the Benicia closure and related impairment charge presenting the most immediate risk; however, the news does not materially change the main profit catalyst, which remains high refinery utilization and optimizing existing assets.

The completion of over US$4.57 billion in share repurchases since September 2023 directly speaks to management’s continued focus on enhancing returns, even during periods of elevated industry costs, directly tying back to the company’s financial discipline, a current driver for supporting per-share earnings and potentially mitigating the impact of asset closures.

By contrast, investors should be aware that the sizable Benicia impairment charge and future closure-related costs could...

Read the full narrative on Valero Energy (it's free!)

Valero Energy is projected to generate $116.8 billion in revenue and $3.8 billion in earnings by 2028. This outlook assumes an annual revenue decline of 0.2% and a $3.04 billion increase in earnings from the current level of $760 million.

Uncover how Valero Energy's forecasts yield a $175.63 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Four individual Simply Wall St Community fair value estimates for Valero Energy range from US$128 to US$307, showing wide divergence. While share buybacks and operational efficiency have recently supported the stock, high one-off impairment costs and West Coast uncertainty remain important factors that could shift future performance.

Explore 4 other fair value estimates on Valero Energy - why the stock might be worth 25% less than the current price!

Build Your Own Valero Energy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Valero Energy research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Valero Energy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Valero Energy's overall financial health at a glance.

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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.

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