Valero Energy Q4 Earnings Beat Estimates on Higher Refining Margins

Valero Energy Corporation VLO reported fourth-quarter 2025 adjusted earnings of $3.82 per share, which beat the Zacks Consensus Estimate of $3.22. The bottom line improved from the year-ago quarter’s level of 64 cents per share.Total quarterly revenues decreased from $30.8 billion in the prior-year quarter to $30.4 billion. The top line, however, beat the Zacks Consensus Estimate of $28.1 billion.The better-than-expected quarterly results can be primarily attributed to an increase in refining margins, higher ethanol production volumes and lower total cost of sales. The positives were partially offset by a decline in renewable diesel margins.Valero Energy Corporation Price, Consensus and EPS Surprise Valero Energy Corporation price-consensus-eps-surprise-chart | Valero Energy Corporation QuoteDividend HikeValero Energy increased its quarterly cash dividend to $1.20 per share (annualized dividend of $4.80 per share), payable on Mar. 9, 2026, to shareholders of record as of Feb. 5, 2026. This represents a 6% increase from the prior dividend of $1.13 per share.Segmental Performance of VLOAdjusted operating income in the Refining segment totaled $1,733 million, up from $441 million in the year-ago quarter. The increase was supported by a higher refining margin per barrel of throughput.In the Ethanol segment, Valero reported an adjusted operating profit of $117 million, up from $20 million in the prior-year quarter. Higher ethanol production volumes and increased ethanol margin per gallon of production aided the business segment.Operating income in the Renewable Diesel segment totaled $92 million, a decline from $170 million in the year-ago quarter. Renewable diesel sales volume declined to 3,101 thousand gallons per day from 3,356 in the year-ago quarter. The segment was affected by a decline in renewable diesel margin per gallon of sales compared to the year-ago level.VLO’s Throughput VolumesIn the fourth quarter, Valero’s refining throughput volumes totaled 3,113 thousand barrels per day (MBbls/d), up from the year-ago quarter’s figure of 2,995 MBbls/d. In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 52%, 9.1% and 16.7%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, blendstocks and others.The Gulf Coast contributed approximately 59.8% to the total throughput volume, while the Mid-Continent, North Atlantic and West Coast regions accounted for 14.8%, 16.8% and 8.5%, respectively.VLO’s Throughput MarginsThe refining margin per barrel of throughput increased to $13.61 from the year-ago level of $8.44.Refining operating expenses per barrel of throughput were $5.03 compared with $4.67 in the year-ago quarter.Depreciation and amortization expenses increased to $2.53 per barrel from $2.17 in the prior-year period.Valero’s adjusted refining operating income was $6.05 per barrel of throughput compared with $1.60 a year ago.VLO’s Cost of SalesTotal cost of sales amounted to $28,468 million, down from the year-ago quarter’s figure of $30,127 million. The decline can be attributed to a fall in the cost of materials and others.Capital Investment & Balance Sheet of VLOThe fourth-quarter capital investment totaled $412 million, of which $368 million was allocated toward sustaining the business.The company had cash and cash equivalents of $4.7 billion at the end of the fourth quarter. As of Dec. 31, 2025, it had a total debt of $8.3 billion and finance-lease obligations of $2.4 billion.VLO’s Zacks Rank and Key PicksVLO currently carries a Zacks Rank #3 (Hold).Some top-ranked stocks from the energy sector are Oceaneering International OII, Subsea7 S.A. SUBCY and W&T Offshore WTI. While Subsea7 currently sports a Zacks Rank #1 (Strong Buy), Oceaneering and W&T Offshore carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Subsea7 helps build underwater oil and gas fields. It is a leading player in the global offshore energy industry, providing engineering, construction and related services at offshore oil and gas fields. The long-term outlook for energy demand remains positive, and Subsea7’s focus on cost-efficient deepwater projects strengthens the position of its subsea business.Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading provider of offshore equipment and technology solutions to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.W&T Offshore benefits from its prolific Gulf of America assets, which offer low decline rates, strong permeability and significant untapped reserves. The company’s recent acquisition of six shallow-water fields in the Gulf of America boosts its production prospects in the future, which is expected to enhance its revenues. Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.SeeWant 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 W&T Offshore, Inc. (WTI): Free Stock Analysis Report Oceaneering International, Inc. (OII): Free Stock Analysis Report Subsea 7 SA (SUBCY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks