Valero third quarter 2026 earnings explained: segments, EPS and valuation multiples

Valero Energy reported its third quarter 2026 results on October 22, 2026. For the three months ended September 30, net income attributable to Valero stockholders under GAAP, the standard US accounting rules, was $6,828 million against $3,720 million in the second quarter, as reported by Valero. That is up 83.5% (Dalsna Finance calculation). Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. A separate Dalsna Finance article covers the second quarter. ^[1][2]

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][3]

In the release chairman, chief executive officer and president Lane Riggs said Valero's refineries ran at utilization rates close to a record during the quarter (a paraphrase). Valero also finished the FCC Unit optimization project at its St. Charles Refinery during the quarter, on schedule and within budget. Its release says the unit is now running and is expected to increase the refinery's capacity to produce higher value products such as alkylate and gasoline. ^[1]

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. A separate Corporate and Other line holds general and administrative costs and, since the second quarter, the decommissioning and redevelopment of the idled Benicia Refinery. ^[1]

Refining operating income almost doubled from the second quarter, to $8,782 million from $4,470 million, while Renewable Diesel fell to $353 million from $717 million and Ethanol to $272 million from $318 million. Valero's quarterly report explains each change against the third quarter of 2025, not against the second quarter of 2026. On that year over year basis it says Refining gained primarily from higher gasoline and distillate margins, partially offset by lower throughput volumes. 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 and higher ethanol and corn coproduct prices, partially offset by higher corn prices. ^[1][2][3]

Against the second quarter, Valero's own figures show Renewable Diesel's margin per gallon of sales falling to $1.62 from $2.52 and its sales volumes to 3,423 thousand gallons a day from 3,833 thousand. The quarterly report notes that Diamond Green Diesel filed a $51 million tariff refund claim, for which Valero recorded a receivable in April 2026 that lowered the second quarter's Renewable Diesel cost of materials. Valero gives no separate explanation of the quarter over quarter change. ^[1][2][3]

Volumes and market conditions

Refining throughput, the crude oil and other feedstocks the refineries processed, averaged 2,972 thousand barrels a day against 2,950 thousand in the second 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 $39.24 per barrel of throughput against $23.62. Ethanol production averaged 4,799 thousand gallons a day, which the release calls a new quarterly record. ^[1][2]

The quarterly report describes resilient 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. The report also cautions that margins could change if the balance of supply and demand, the cost of crude and other inputs or world events shift. ^[3]

The numbers, quarter over quarter

Revenues were $46,098 million in the third quarter against $44,476 million in the second, up 3.6% (Dalsna Finance calculation). Operating income rose much faster, to $9,073 million from $5,196 million. After other income, interest, income tax of $2,067 million and $161 million of net income attributable to noncontrolling interests, net income attributable to Valero stockholders was $6,828 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: 14.8% against 8.4%. ^[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. In the third quarter the only adjustment added back $3 million of Port Arthur fire expenses after tax, $4 million before tax, giving $6,831 million. In the second quarter adjusted net income was $3,697 million, after removing a $34 million LIFO inventory benefit and adding back $11 million of Port Arthur fire expenses, both after tax. ^[1][2]

The fire at the Port Arthur Refinery on March 23, 2026 is still being worked through. The quarterly report says Valero recorded a $21 million insurance recovery receivable in the third quarter, inside both measures, and received no insurance proceeds in the first nine months. It also says that during the third quarter Valero received proposed citations and penalties from some regulatory enforcement agencies over the fire, which it intends to contest, and that lawsuits including a proposed class action are pending. ^[3]

Cash flow, debt and shareholder returns

Net cash provided by operating activities was $6,932 million in the third quarter against $5,580 million in the second. 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 $7,253 million against $4,485 million. Capital investments attributable to Valero, also non GAAP, were $429 million against $346 million. ^[1][2]

Valero said its stockholder cash returns came to a payout ratio of 52 percent of adjusted operating cash flow in the third quarter, against 59 percent in the second. The quarterly report says it bought 9,056,938 shares for treasury in the third quarter, and that over the first nine months it returned $7.3 billion to stockholders through purchases of common stock for treasury and dividend payments. The dividend was $1.20 a share in both quarters. ^[1][2][3]

Valero repaid $100 million of 7.65% debentures that matured in July and $426 million of 3.400% senior notes that matured in September. It ended the quarter with $8,579 million of total debt, about $2.4 billion of finance lease obligations and $9,840 million of cash and cash equivalents. Its debt to capitalization ratio, net of cash, was 4 percent at September 30, 2026 against 11 percent at June 30. ^[1][2]

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 $23.89 for the third quarter and $12.62 for the second, and adjusted diluted EPS of $23.90 and $12.54. 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 third quarter that allocation was $19 million, leaving $6,809 million for common stockholders, and $6,809 million divided by 285 million shares is $23.89 (Dalsna Finance calculation). We use Valero's reported EPS. ^[1][2][3]

Fewer shares helped. The diluted share count fell to 285 million from 294 million, so EPS rose 89.3% while net income rose 83.5% (Dalsna Finance calculation from the reported figures). ^[1][2]

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 third quarter report lists 278,884,400 shares of common stock, Valero's only class, outstanding as of October 23, 2026. That gives a market cap of about $111.46 billion (Dalsna Finance calculation). Every multiple and share price below uses this one share count. ^[4][3]

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 third quarter's conditions lasted a full year. GAAP net income of $6,828 million times 4 is $27,312 million, which gives an annualised P/E of 4.1. Adjusted net income of $6,831 million times 4 is $27,324 million, which also gives an adjusted annualised P/E of 4.1 (Dalsna Finance calculation). ^[1][4][3]

A forward P/E uses a published estimate of future earnings. We did not find a recent dated full year 2026 earnings estimate 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 September 30, 2026. GAAP net income over that period added up to $12,945 million, which gives a trailing P/E of 8.6. Adjusted net income added up to $12,953 million, which gives an adjusted trailing P/E of 8.6 as well (Dalsna Finance calculation). Both sit well above the annualised multiples because the third quarter earned more than any of the three before it. ^{[5][6][2][1][4][3]}

The last four quarters

Every quarterly figure here is as reported by Valero in one of its earnings releases. GAAP net income added up to $12,945 million and adjusted net income to $12,953 million (Dalsna Finance calculation for the sums). The third quarter of 2026 alone carried more than half of both totals. ^[5][6][2][1]

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

Suppose revenues stayed at the third quarter's level for a full year, with no growth and no decline: $46,098 million times 4, or $184,392 million. The first base case keeps the 14.8% GAAP profit margin, which gives $27,312 million of net income, or $97.93 per share on the cover share count. The second uses the adjusted margin, also 14.8% when rounded, which adds back the Port Arthur fire expenses as Valero's adjusted figure does: $27,324 million, or $97.98 per share (Dalsna Finance calculation). ^[1][3]

Both cases are simply the third 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 $127 million was smaller than interest expense of $144 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][4]

What to watch

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). The next report will show whether the deal closed. ^[7]

For the fourth quarter, the quarterly report lists factors Valero expects to matter (company expectations, as stated): demand growth staying measured amid the Middle East conflict, continued disruption to global refining capacity keeping product inventories low, volatile crude oil differentials and ethanol following its usual seasonal pattern. The next report will show whether the refining margin per barrel moved from the third quarter's $39.24 and whether the Port Arthur penalty proposals were resolved. ^[3][1]

How these figures were made: inputs come from Valero's releases for the fourth quarter of 2025 and the first three quarters of 2026 and from its third quarter 2026 report on SEC EDGAR, plus the dated closing price 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. ^{[5][6][2][1][3][4]}