As of May 22, 2025, Valero Energy Corp has a Discounted Cash Flow (DCF) derived fair value of $161.32 per share. With the current market price at $127.80, this represents a potential upside of 26.2%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $158.96 |
| DCF Fair Value (10-year) | $161.32 |
| Potential Upside (5-year) | 24.4% |
| Potential Upside (10-year) | 26.2% |
| Discount Rate (WACC) | 7.2% - 9.3% |
Revenue is projected to grow from $129881 million in 12-2024 to $155311 million by 12-2034, representing a compound annual growth rate of approximately 1.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 129881 | 10% |
| 12-2025 | 123743 | -5% |
| 12-2026 | 127468 | 3% |
| 12-2027 | 130017 | 2% |
| 12-2028 | 134957 | 4% |
| 12-2029 | 137656 | 2% |
| 12-2030 | 140409 | 2% |
| 12-2031 | 143218 | 2% |
| 12-2032 | 146082 | 2% |
| 12-2033 | 149004 | 2% |
| 12-2034 | 155311 | 4% |
Net profit margin is expected to improve from 2% in 12-2024 to 2% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 3006 | 2% |
| 12-2025 | 2739 | 2% |
| 12-2026 | 2822 | 2% |
| 12-2027 | 2878 | 2% |
| 12-2028 | 2987 | 2% |
| 12-2029 | 3047 | 2% |
| 12-2030 | 3108 | 2% |
| 12-2031 | 3170 | 2% |
| 12-2032 | 3234 | 2% |
| 12-2033 | 3298 | 2% |
| 12-2034 | 3438 | 2% |
with a 5-year average of $1390 million. Projected CapEx is expected to maintain at approximately 1% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 1354 |
| 12-2026 | 1353 |
| 12-2027 | 1354 |
| 12-2028 | 1523 |
| 12-2029 | 1699 |
| 12-2030 | 1742 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 26 |
| Days Inventory | 20 |
| Days Payables | 33 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 4055 | 588 | 1206 | (759) | 3021 |
| 2026 | 5528 | 808 | 1656 | 578 | 2485 |
| 2027 | 5613 | 824 | 1689 | 61 | 3039 |
| 2028 | 5943 | 855 | 1753 | 60 | 3274 |
| 2029 | 6208 | 872 | 1788 | 204 | 3343 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 158.96 | 24.4% |
| 10-Year DCF (Growth) | 161.32 | 26.2% |
| 5-Year DCF (EBITDA) | 135.98 | 6.4% |
| 10-Year DCF (EBITDA) | 142.58 | 11.6% |
Is Valero Energy Corp (VLO) a buy or a sell? Valero Energy Corp is definitely a buy. Based on our DCF analysis, Valero Energy Corp (VLO) appears to be significantly undervalued with upside potential of 26.2%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $127.80.