Is VALERO ENERGY CORP/TX a Quality Business?
Analyzing business fundamentals using proven investment principles
Decent metrics but limited evidence of durable competitive advantage
About VALERO ENERGY CORP/TX
Valero Energy Corporation is an American multinational manufacturing and marketing company headquartered in San Antonio, Texas, operating as one of the world's largest independent petroleum refiners and a leading producer of renewable fuels and other products. Founded in 1980, Valero operates through three segments: Refining (petroleum refining operations), Renewable Diesel (renewable diesel production and sales), and Ethanol (ethanol production and sales). The company owns and operates 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day across the United States, Canada, and the United Kingdom, producing conventional gasoline, premium gasoline, gasoline meeting California Air Resources Board specifications, diesel fuel, jet fuel, asphalt, petrochemicals, lubricants, and other refined products. Valero is also a leading producer of renewable diesel through its Diamond Green Diesel joint venture with Darling Ingredients and operates 14 ethanol plants with combined production capacity of approximately 1.9 billion gallons per year. Trading on the New York Stock Exchange under ticker symbol VLO and a component of the S&P 500, Valero markets products through a network of approximately 7,000 retail and branded wholesale outlets across the United States, Canada, United Kingdom, and Ireland under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands.
📚 How We Measure Business Quality
The Zyberno Score answers one question: "Is this a quality business worth owning?"
We analyze 16 fundamental metrics across four key dimensions, using principles from
Warren Buffett, Benjamin Graham, Peter Lynch,
and Charlie Munger. Each category is worth 25 points for a total of 100.
This score measures business quality only — not whether the stock is cheap, what return you'll get, or when to buy. For that, see the Valuation Trilogy below.
🎯 Recent Earnings Momentum
A separate, shorter-horizon signal — not part of the long-term quality score above. Standardized Unexpected Earnings (SUE) measures how far VLO's latest quarter beat or missed its own seasonal earnings trend.
View VLO's full earnings-surprise history and what this signal means →
💡 Quality Is Only Half the Picture
A high quality score means VLO shows strong business fundamentals.
But even the best business can be a poor investment at the wrong price.
As Warren Buffett says: "Price is what you pay, value is what you get."
To complete your analysis, examine our Valuation Trilogy:
📈 Price Action Check
Market trend context — not part of the Zyberno Score
The market has been actively rewarding VLO over the past year. Strong momentum on a quality business usually means the story is already being recognised — check the valuation signals above before paying up. Full momentum analysis →
Conclusion: Is VLO a Good Stock?
According to Zyberno's analysis, VALERO ENERGY CORP/TX (VLO) is an Average Business, earning a Zyberno Score of 52/100.
What drives VLO's score
Zyberno's analysis of VLO's fundamentals identifies the following key drivers. An ROE of 26.6% is well above the 15% quality threshold, indicating VALERO ENERGY CORP/TX generates exceptional returns from shareholders' equity — a hallmark of businesses with durable competitive advantages. ROIC of 25.9% comfortably exceeds the cost of capital for most businesses, signaling that VALERO ENERGY CORP/TX creates significant value on every dollar of capital deployed. A net margin of 5.2% is thin, leaving limited buffer against revenue shortfalls. A debt-to-equity ratio of 0.42x is moderate, representing manageable leverage. An interest coverage ratio of 5.7x indicates comfortable debt servicing capacity. Revenue has contracted at approximately 5.0% annually over the past five years, a trend Zyberno's model treats as a concern. A Piotroski F-Score of 5/9 is mixed, with some positive and some negative financial health signals.
The Brina Gap measures the difference between the growth a business can fundamentally sustain and the growth the market is already pricing in. VALERO ENERGY CORP/TX's Brina Gap is -5.3% — the enterprise value implies the market expects somewhat faster growth than the business fundamentals currently support. The market is modestly overestimating forward growth capacity.
Zyberno's score and valuation reflect the direct output of the model — business quality from fundamentals, margin of safety from owner earnings, Brina Gap from the reverse DCF. The numbers are not adjusted toward the current price, analyst ratings, or market sentiment. The score measures the quality of the business. The valuation measures the price you pay for it.
Zyberno Verdict
According to Zyberno's model, VALERO ENERGY CORP/TX (VLO) is an Average Business with a Zyberno Score of 52/100.
❓ Frequently Asked Questions
What does VLO's Zyberno Score of 52/100 mean?
According to Zyberno's scoring model, a score of 52/100 places VALERO ENERGY CORP/TX in the Average Business category — decent metrics but limited evidence of durable competitive advantage. Zyberno's model scores 75–100 as excellent, 65–74 as good, 50–64 as average, 30–49 as below average, and below 30 as poor, based on the investment frameworks of Buffett, Graham, Lynch, and Munger. Note that a high quality score measures business fundamentals, not whether the stock is currently priced attractively — for that, see the margin of safety analysis.
What makes a stock "high quality"?
A high-quality stock typically exhibits: strong returns on equity and invested capital (indicating competitive advantages), healthy profit margins, low debt levels, ample liquidity, consistent cash flow generation, and sustainable growth. We analyze 16 key metrics across four categories - Profitability (ROE, ROIC, margins), Financial Strength (debt, liquidity, coverage), Cash Flow Quality (FCF, OCF vs earnings), and Growth & Consistency (revenue/profit trends, Piotroski score) - drawing from the investment philosophies of Buffett, Graham, Lynch, and Munger.
How is the quality score different from a stock rating?
Our quality score measures business fundamentals - how well the company operates, generates profits, and maintains financial health. Unlike analyst "buy/sell" ratings, we don't tell you whether to purchase the stock. A company can have excellent quality (great business) but poor investment potential (if overpriced), or vice versa. For valuation analysis, see our Margin of Safety page.
Why do you use Owner Earnings instead of regular earnings?
Owner Earnings, a concept popularized by Warren Buffett, represents the true cash available to shareholders after maintaining the business. Unlike accounting earnings, which can be manipulated through depreciation schedules and accruals, Owner Earnings = Operating Cash Flow minus Maintenance Capital Expenditures. This gives a clearer picture of what a business actually generates for its owners. Learn more about VLO's Owner Earnings.
How often is the quality score updated?
Quality scores are recalculated whenever new financial data becomes available, typically after quarterly earnings reports. The underlying metrics (ROE, ROIC, debt ratios, etc.) come from company filings and are updated as soon as they're reported. For the most comprehensive and up-to-date data, visit the full VLO stock report.
📊 Full VLO Stock Report
Complete financial data, charts, all 250+ metrics, and detailed analysis for VALERO ENERGY CORP/TX.
🎯 VLO Earnings Surprise (SUE)
See whether VALERO ENERGY CORP/TX is beating or missing its own earnings trend — Standardized Unexpected Earnings and post-earnings drift.
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