Valero Energy Q3 Earnings Beat Estimates on Higher Refining Margins

Valero Energy Corporation VLO reported third-quarter 2025 adjusted earnings of $3.66 per share, which beat the Zacks Consensus Estimate of $2.95. The bottom line improved from the year-ago quarter’s level of $1.16 per share.

Total quarterly revenues decreased from $32.9 billion in the prior-year quarter to $32.2 billion. The top line, however, beat the Zacks Consensus Estimate of $29.8 billion.

Better-than-expected quarterly results can be primarily attributed to an increase in refining margins, higher ethanol margins and lower total cost of sales. The positives were partially offset by a decline in renewable diesel sales volumes.

Valero Energy Corporation Price, Consensus and EPS Surprise

Valero Energy Corporation price-consensus-eps-surprise-chart | Valero Energy Corporation Quote

Segmental Performance of VLO

Adjusted operating income in the Refining segment totaled $1,665 million, up from $568 million in the year-ago quarter. The segment’s performance was supported by a higher refining margin per barrel of throughput.

In the Ethanol segment, Valero reported an adjusted operating profit of $183 million, up from $153 million in the prior-year quarter. A higher ethanol margin per gallon of production aided the business segment.

Operating loss in the Renewable Diesel segment totaled $28 million against an operating income of $35 million in the year-ago quarter. Renewable diesel sales volume declined to 2,717 thousand gallons per day from 3,544 in the year-ago quarter. Our estimate for the same was pegged at 3,196 thousand gallons per day. The segment was affected by a decline in the renewable diesel margin per gallon of sales compared to the year-ago level.

VLO’s Throughput Volumes

In the third quarter, Valero’s refining throughput volumes totaled 3,087 thousand barrels per day (MBbls/d), up from the year-ago quarter’s figure of 2,884 MBbls/d. The figure came in higher than our estimate of 3,070.6 MBbls/d.

In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 53.8%, 9.1% and 16.4%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, and blendstocks and others.

The Gulf Coast contributed 60% to the total throughput volume, while the Mid-Continent, North Atlantic and West Coast regions accounted for 15%, 17% and 8%, respectively.

VLO’s Throughput Margins

The refining margin per barrel of throughput increased to $13.14 from the year-ago level of $9.09.

Refining operating expenses per barrel of throughput were $4.71 compared with $4.73 in the year-ago quarter.

Depreciation and amortization expenses increased to $2.57 per barrel from $2.22 in the prior-year period.

Valero’s adjusted refining operating income was $5.86 per barrel of throughput compared with $2.14 a year ago.

VLO’s Cost of Sales

Total cost of sales amounted to $30,396 million, down from the year-ago quarter’s figure of $32,122 million. The decline can be attributed to a fall in the cost of materials and others.

Capital Investment & Balance Sheet of VLO

The third-quarter capital investment totaled $409 million, of which $364 million was allocated toward sustaining the business.

The company had cash and cash equivalents of $4.8 billion at the end of the third quarter. As of Sep. 30, 2025, it had a total debt of $8.4 billion and finance-lease obligations of $2.2 billion.

VLO’s Zacks Rank and Other Key Picks

VLO currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the energy sector are Cheniere Energy Inc. LNG, Archrock, Inc. AROC and TechnipFMC plc FTI. While Cheniere Energy sports a Zacks Rank #1 (Strong Buy) at present, Archrock and TechnipFMC carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cheniere Energy is involved in LNG-related businesses, which include LNG terminals and natural gas marketing. The company has achieved a milestone with the first production from the first LNG train of its Corpus Christi Stage 3 Liquefaction Project. The project, which includes seven midscale LNG trains, aims to expand the production capacity of the Corpus Christi Liquefaction facility. This expansion is expected to strengthen Cheniere's position in the rapidly growing global LNG market, enabling it to meet the rising demand for LNG both in the United States and internationally.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, AROC is expected to witness sustained demand for its services.

TechnipFMC plc is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. FTI’s project backlog, now at $15.8 billion, has grown sequentially in six of the last seven quarters, reinforcing long-term revenue visibility for the company.

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This article originally published on Zacks Investment Research (zacks.com).

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