QS Research · Michael Burry's Scion Capital analyst template · 2006
VALERO ENERGY CORP/TX (VLO)
As of 2026-11-08 · 11/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -68% · downside -82% · upside +0%
The market is not missing the current strength; it is extrapolating it. TTM net income to common of $12.91B at the company's own 7.5x P/E is roughly today's $346.45 price, while the FY2020-FY2025 average of $4.15B at the same 7.5x is only about $112/share, about -68%. Q3 2026 was an operating blowout and the balance sheet is net cash, but refining margins are the cycle, not a franchise, and policy credits add risk. I would short: base -67.8%, downside -81.8%, upside +0.2%, with the upside case already assuming TTM peak earnings persist.
Key numbers
- Share price: $346.45
- Market cap: $96.62B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $153.33B
- EV / EBITDA (TTM): 5.4x
- P/E (TTM): 7.5x
- Price / book: 3.45x
The 15 boxes
- ✓ 1. Long-form business notes
Valero is a three-segment refiner — refining, renewable diesel and ethanol — described in the FY 2020 10-K as owning 15 petroleum refineries in the U.S., Canada and the U.K. with about 3.2 million BPD of combined feedstock throughput capacity, 13 ethanol plants, and a consolidated DGD renewable diesel joint venture. Earnings are deeply cyclical: operating income ran -$1.58B (FY2020), $15.69B (FY2022) and $3.18B (FY2025) on revenue of $64.91B, $176.38B and $122.69B respectively, with operating cash flow of $5.83B in FY2025. Between the oldest and newest 10-K the low-carbon side shifts from a capital build-out (>$3 billion invested, DGD plant expansion and a second plant) to a business whose economics the latest filing ties explicitly to RFS, LCFS and OBBB credit rules it calls considerable risks for both refining and renewable diesel. No quarterly, nine-month or TTM figures appear in the sources; the frame here is annual FY2020-FY2025 only.
- ○ 2. Competitive advantage
On the evidence here VLO reads as a large, integrated-scale refiner with no durable advantage I can document: its margin history is the margin history of the crack spread, with operating income swinging from -$1.58B in FY2020 to $15.69B in FY2022 and back to $3.18B in FY2025 on revenue that fell from $176.38B to $122.69B over the same two years. The scale is real (15 refineries, ~3.2 million BPD combined throughput at December 31, 2025) and so is the logistics web of docks and common-carrier pipelines, but feedstocks are bought at the seller's posted market price, not at a negotiated company-specific price, and the low-carbon position is credit-dependent. The sources name no competitor by name and give no market-share data.
- ✓ 3. 10-Q takeaways
Q3 2026 was a margin-driven blowout: revenue rose to $46.098 billion from $32.168 billion, and net income attributable to Valero stockholders jumped to $6.828 billion from $1.095 billion, with Refining margin $10.730 billion versus $3.731 billion. First nine months 2026 net income attributable was $11.811 billion versus $1.214 billion, and operations generated $13.9 billion of cash. Cash rose, stockholder returns were $7.3 billion combined for stock purchases and dividends, and the Q4 2026 outlook is qualitative with no numeric guidance; the 10-Q reports no material risk-factor changes.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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