Valero second quarter 2026 earnings explained: segments, cash flow and valuation multiples

Valero Energy reported its second quarter 2026 results on July 30, 2026. It has since reported its third quarter, on October 22, 2026, and a separate Dalsna Finance article covers those results. This article looks back at the three months ended June 30, 2026 and compares them with the first quarter. Net income attributable to Valero stockholders under GAAP, the standard US accounting rules, was $3,720 million against $1,263 million, as reported by Valero. Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. ^[1][2][3]

Valero in brief

Valero Energy Corporation is based in San Antonio, Texas, and its common stock trades on the New York Stock Exchange under the ticker VLO. Through its subsidiaries it makes and markets liquid transportation fuels, both petroleum based and low carbon, as well as petrochemical products. Its release says it sells them mainly in the United States, Canada, the United Kingdom, Ireland and Latin America. ^[1][4]

Two events shaped the first half of 2026. The Benicia Refinery in California stopped refining by the end of April 2026, under a plan Valero approved in March 2025, and its decommissioning and redevelopment moved into Corporate and Other from the second quarter. Then on March 23, 2026 a fire in a distillate hydrotreater unit shut down the Port Arthur Refinery on the US Gulf Coast. The quarterly report says the refinery restarted in April at reduced rates, returned to normal rates during the second quarter and processed less than usual over the quarter as a whole. ^[1][4]

Three business segments

Valero reports three segments. Refining is the largest: 14 petroleum refineries across the United States, Canada and the United Kingdom that together can process about 3.0 million barrels a day. Renewable Diesel is Diamond Green Diesel, a joint venture that Valero owns half of and consolidates in its accounts. Its Gulf Coast plants can make about 1.2 billion gallons a year of low carbon fuels, renewable diesel and sustainable aviation fuel among them. Ethanol is a group of 12 plants in the US Mid Continent region able to make about 1.7 billion gallons a year. General and administrative costs sit in a separate Corporate and Other line. ^[1]

Every segment earned more in the second quarter than in the first. Valero's quarterly report explains each change against the second quarter of 2025, not against the first quarter of 2026. On that year over year basis it says Refining gained primarily from higher gasoline and distillate margins, partially offset by a decline in sweet crude oil differentials. It says Renewable Diesel gained primarily from higher product prices, partially offset by higher feedstock costs. Ethanol gained primarily from clean fuel production credits recognised in 2026, higher ethanol and corn coproduct prices and lower corn prices. ^[4][1][2]

Adjusted Refining operating income, a non GAAP measure, removes a $44 million benefit from a LIFO liquidation and adds back $18 million of other operating expenses, which include $15 million of Port Arthur repair costs. That left it at $4,444 million against $1,830 million in the first quarter, as reported by Valero. ^[1][2]

Volumes and market conditions

Refining throughput, the crude oil and other feedstocks the refineries processed, averaged 2,950 thousand barrels a day against 2,914 thousand in the first quarter. Refining margin, a non GAAP measure that Valero compares with the industry's market reference margins, adds operating expenses and depreciation back to Refining operating income and leaves out some other items. It came to $23.62 per barrel of throughput against $14.90. ^[1][2]

The quarterly report describes strong global demand for transportation fuels while supply was constrained, with geopolitical events disrupting commodity markets and limiting refining capacity. Prices for fuels and for crude oil both rose, and the gap between them gave strong refining margins. In Valero's market price tables Brent crude averaged $97.06 a barrel in the second quarter against $66.59 a year earlier, and US Gulf Coast ultra low sulfur diesel averaged $43.52 a barrel above Brent against $14.79. ^[4][1]

The numbers, quarter over quarter

Revenues were $44,476 million in the second quarter against $32,381 million in the first, up 37.4% (Dalsna Finance calculation). Operating income rose to $5,196 million from $1,731 million. After other income, interest, income tax of $1,094 million and $353 million of net income attributable to noncontrolling interests, net income attributable to Valero stockholders was $3,720 million. Noncontrolling interests are the shares of consolidated businesses that belong to other owners. Profit margin here means net income attributable to Valero stockholders divided by revenues: 8.4% against 3.9%. ^[1][2]

Valero also reports adjusted net income attributable to Valero stockholders, a non GAAP measure. It leaves out items Valero considers not indicative of its core operating performance, after tax at a combined statutory rate of 22.5 percent. In the second quarter that meant removing the LIFO liquidation benefit of $34 million after tax and adding back $11 million of Port Arthur fire expenses after tax, giving $3,697 million. The first quarter of 2026 had no adjustments, so its adjusted figure equals its GAAP figure of $1,263 million. ^[1][2]

LIFO, short for last in first out, is an inventory method that matches current costs with current revenues. Valero says West Coast inventories fell as Benicia was idled, so costs from older inventory layers flowed into the quarter, which it shows as a $44 million benefit before tax. Two other items stay inside both measures. The quarterly report says Valero recorded a $78 million insurance recovery receivable for Port Arthur losses in the quarter, and that Diamond Green Diesel filed a $51 million tariff refund claim, for which Valero recorded a receivable in April 2026 that lowered Renewable Diesel's cost of materials. ^[1][4]

Cash flow and shareholder returns

Net cash provided by operating activities was $5,580 million in the second quarter against $1,390 million in the first. Valero's adjusted figure, a non GAAP measure that leaves out changes in working capital and the other joint venture member's share of Diamond Green Diesel's operating cash flow, was $4,485 million against $1,591 million. Capital investments attributable to Valero, also non GAAP, were $346 million against $430 million. ^[1][2]

Valero reported stockholder cash returns of $2.6 billion in the second quarter and $938 million in the first, each a payout ratio of 59 percent of adjusted operating cash flow. The quarterly report says it bought 9,011,171 shares for treasury in the second quarter. The dividend was $1.20 a share in both quarters, after an increase from $1.13 announced on January 22, 2026, and Valero declared the same amount on July 16, 2026. Total debt was $9,101 million at June 30, 2026, with $2,248 million of finance lease obligations and $7,874 million of cash and cash equivalents. ^[1][2][4]

Earnings per share

Earnings per share, or EPS, is profit divided by the number of shares. The diluted figure also counts shares that could be issued under stock awards. Valero reported diluted EPS of $12.62 for the second quarter and $4.22 for the first, and adjusted diluted EPS of $12.54 and $4.22. Dividing earnings by the diluted share count in the release gives slightly higher results. That is because Valero first subtracts income allocated to participating securities, which its quarterly report says are restricted stock and performance awards, and divides by unrounded share counts. In the second quarter that allocation was $10 million, leaving $3,710 million for common stockholders. We use Valero's reported EPS. ^[1][2][4]

What the market values Valero at

Market capitalization, or market cap, is what the stock market values the whole company at: the share price times the number of shares. Valero shares closed at $399.66 on Friday, October 30, 2026, as reported by StockAnalysis. The cover of the second quarter report lists 287,927,461 shares of common stock, Valero's only class, outstanding as of July 24, 2026. That gives a market cap of about $115.07 billion (Dalsna Finance calculation). Every multiple and share price below uses this one share count. ^[5][4]

Keep the timing in mind. The price is from after the third quarter results came out, so it reflects news that is not in this article. The earnings behind every multiple stop at June 30, 2026, and the share count is the one on the second quarter report's cover. The multiples below therefore set a later price against the second quarter's numbers, and are not a current valuation on the latest results. ^[5][3][4]

Six valuation multiples

The price to earnings ratio, or P/E, is market cap divided by a year of earnings. It shows how many dollars the market is paying for each dollar of yearly profit. Annualised means one quarter multiplied by four, so it assumes the second quarter's conditions lasted a full year. GAAP net income of $3,720 million times 4 is $14,880 million, which gives an annualised P/E of 7.7. Adjusted net income of $3,697 million times 4 is $14,788 million, which gives an adjusted annualised P/E of 7.8 (Dalsna Finance calculation). ^[1][5][4]

A forward P/E uses a published estimate of future earnings. We did not find a dated full year 2026 earnings estimate, made after the second quarter results, that we could open and check against its source, so this article shows no forward P/E or adjusted forward P/E rather than use an unverified number. Valero gave no earnings guidance in its release. ^[1]

A trailing P/E, sometimes called a historical P/E, uses the last four reported quarters, here the twelve months to June 30, 2026. GAAP net income over that period added up to $7,212 million, which gives a trailing P/E of 16.0. Adjusted net income added up to $7,256 million, which gives an adjusted trailing P/E of 15.9 (Dalsna Finance calculation). Both sit well above the annualised multiples because the second quarter earned far more than the three quarters before it. ^{[3][6][2][1][5][4]}

The last four quarters

Every quarterly figure here is as reported by Valero. The third quarter of 2025 comes from the comparison column of the third quarter 2026 release, and the fourth quarter of 2025 from the release for that quarter. GAAP net income added up to $7,212 million and adjusted net income to $7,256 million (Dalsna Finance calculation for the sums). The second quarter of 2026 was the largest of the four on both measures. ^[3][6][2][1]

Two base cases: the second quarter held flat for a year

Suppose revenues stayed at the second quarter's level for a full year, with no growth and no decline: $44,476 million times 4, or $177,904 million. The first base case keeps the 8.4% GAAP profit margin, which gives $14,880 million of net income, or $51.68 per share on the cover share count. The second uses the 8.3% adjusted margin, which leaves out the LIFO benefit and the Port Arthur fire expenses as Valero's adjusted figure does: $14,788 million, or $51.36 per share (Dalsna Finance calculation). ^[1][4]

Both cases are simply the second quarter annualised, so at its own annualised P/E each returns the October 30, 2026 close of $399.66 by construction. The other cells only show how the price moves when the same earnings are given a different multiple. There is no separate operating margin case: other income of $116 million was smaller than interest expense of $145 million, so net income was not lifted by items below the operating line. No management scenario follows either, because the release gives no revenue figure for a future year. ^[1][5]

Sector comparison

This table sets the second quarter at Valero beside seven other large US oil and gas companies, using each company's own reported figures for the three months ended June 30, 2026, though integrated companies, producers and refiners earn money in different ways, so margins are not like for like. Each P/E here divides the October 30, 2026 close by four times the quarter's diluted EPS, so it can differ a little from the market cap based P/E earlier in this article. ^[1][5]

What came next

Valero released its third quarter results on October 22, 2026. They are covered in a separate Dalsna Finance article, which is the place to look for whether the St. Charles FCC Unit optimization project, a $230 million project the second quarter release still expected to start up in the third quarter, was completed. This article uses no third quarter 2026 results. ^[3][1]

On October 29, 2026 a Valero subsidiary agreed to buy LYB Houston Hub Holdings LLC from a subsidiary of LyondellBasell for $320.5 million, subject to closing adjustments. It indirectly owns a facility of about 700 acres next to Valero's Houston refinery that operated as a petroleum refinery. Closing depends on customary conditions, including the end of the federal antitrust waiting period, and Valero expects it by the end of 2026 (a company expectation, as stated in its filing). ^[25]

Two legal items tied to the period. The quarterly report says Valero has received lawsuits over the Port Arthur fire, including a proposed class action, and that the full extent of any losses cannot be reasonably estimated yet. It also reports that violation notices issued to the Benicia Refinery by the Bay Area Air Quality Management District between 2019 and 2023 were combined and resolved during the second quarter. ^[4]

How these figures were made: inputs come from Valero's releases for the fourth quarter of 2025 and the first, second and third quarters of 2026 and from its second quarter report on SEC EDGAR. The share price is the dated close named above. Calculations use unrounded inputs and are rounded only at the end, with multiples to one decimal, per share figures and prices to the cent and dollar amounts in millions. ^{[6][2][1][3][4][5]}