Have you been paying attention to shares of Valero Energy (VLO)? Shares have been on the move with the stock up 14.3% over the past month. The stock hit a new 52-week high of $260.31 in the previous session. Valero Energy has gained 58.8% since the start of the year compared to the 32% gain for the Zacks Oils-Energy sector and the 50.3% return for the Zacks Oil and Gas - Refining and Marketing industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on April 30, 2026, Valero Energy reported EPS of $4.22 versus consensus estimate of $3.07.
For the current fiscal year, Valero Energy is expected to post earnings of $28.26 per share on $132.54 in revenues. This represents a 166.35% change in EPS on a 8.03% change in revenues. For the next fiscal year, the company is expected to earn $21.3 per share on $128.3 in revenues. This represents a year-over-year change of -24.62% and -3.2%, respectively.
Valuation Metrics
While Valero Energy has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Valero Energy has a Value Score of B. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 9.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 9.7X. On a trailing cash flow basis, the stock currently trades at 12X versus its peer group's average of 9.4X. Additionally, the stock has a PEG ratio of 0.36. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Valero Energy currently has a Zacks Rank of #1 (Strong Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Valero Energy passes the test. Thus, it seems as though Valero Energy shares could have a bit more room to run in the near term.
How Does VLO Stack Up to the Competition?
Shares of VLO have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Marathon Petroleum Corporation (MPC). MPC has a Zacks Rank of #1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of B.
Earnings were strong last quarter. Marathon Petroleum Corporation beat our consensus estimate by 129.17%, and for the current fiscal year, MPC is expected to post earnings of $29.67 per share on revenue of $138.49 billion.
Shares of Marathon Petroleum Corporation have gained 21.2% over the past month, and currently trade at a forward P/E of 8.75X and a P/CF of 11.88X.
The Oil and Gas - Refining and Marketing industry is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for VLO and MPC, even beyond their own solid fundamental situation.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Valero Energy Corporation (VLO): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).