Core Viewpoint - Valero Energy (VLO) is assigned a hold rating, indicating that there are no substantial grounds to believe the company will generate significant value in the near term [1]. Company Analysis - Valero Energy's current market position does not suggest strong potential for value generation, leading to a cautious outlook [1]. Analyst Background - The analyst, Daniel Mellado, has a background in economics and statistics, with experience in analyzing agricultural commodities and managing trading and data analysis teams [1]. - His expertise includes developing strategies for algorithmic trading and providing analysis and valuation for sectors such as commodities, banking, technology, and pharmaceuticals [1]. Investment Approach - The investment recommendations are based on a comprehensive analysis of financial statements, regulations, and macroeconomic variables [1].

Core Viewpoint - The focus on dividend stocks is increasing as the U.S. Federal Reserve announced another rate cut, prompting investors to consider stocks that offer dividends and potential capital appreciation for enhanced total returns [1] Valero Energy (VLO) - Valero Energy returned $1.3 billion to stockholders in Q3 2025, comprising $351 million in dividends and $931 million in share repurchases [3] - The company declared a quarterly dividend of $1.13 per share, resulting in an annualized dividend of $4.52 and a yield of 2.7% [3] - Goldman Sachs analyst Neil Mehta reiterated a buy rating on VLO and raised the price target to $197 from $180, citing strong refining margins and a constructive refining outlook [4] - Management's focus on capital returns and excess free cash flow allocation is expected to support approximately $4.6 billion in capital returns in 2026, implying a 9% capital return yield [6] Albertsons Companies (ACI) - Albertsons reported strong second-quarter results for fiscal 2025, driven by robust pharmacy sales and digital business [7] - The company announced a quarterly dividend of 15 cents per share, with an annualized dividend of 60 cents per share, yielding 3.3% [7] - Tigress Financial analyst Ivan Feinseth reiterated a buy rating on ACI and increased the price target to $29 from $28, highlighting growth through AI-powered digital sales and a high-margin retail media platform [8] - ACI's loyalty program, For U, saw membership increase by over 13% year-over-year, enhancing digital engagement and spending growth [10] - Albertsons is enhancing shareholder returns through ongoing dividend increases and a $750 million accelerated share repurchase authorization [11] Williams Companies (WMB) - Williams announced a quarterly cash dividend of 50 cents per share, reflecting a 5.3% year-over-year increase, with an annualized dividend of $2 per share and a yield of 3.5% [12] - RBC Capital analyst Elvira Scotto reiterated a buy rating on WMB with a price forecast of $75, citing the need for more energy infrastructure driven by rising power demand [13] - Scotto expects WMB to achieve a CAGR of about 10% in EBITDA from 2025 through 2030, with significant growth anticipated in Q3 2025 across all business segments [14] - The upcoming February analyst day is viewed as a potential catalyst for WMB, with expectations of an increase in EBITDA growth targets [15]

Core Viewpoint - Valero Energy has appointed Homer Bhullar as the new Chief Financial Officer (CFO), effective January 1, 2026 [1] Company Summary - The appointment of Homer Bhullar as CFO indicates a strategic move by Valero Energy to strengthen its financial leadership [1]

Core Points - Valero Energy Corporation announced the retirement of CFO Jason Fraser, effective December 31, 2025, with Homer Bhullar appointed as the new CFO starting January 1, 2026 [1][2][3] Management Transition - Jason Fraser has been with Valero since 1999 and has held various leadership roles, including General Counsel, contributing significantly to the company's success [2] - Homer Bhullar has been with Valero since 2014 and has served as Vice President-Investor Relations and Finance since April 2021, bringing extensive experience in finance and leadership to the CFO role [3] Company Overview - Valero Energy Corporation is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels, operating 15 refineries with a combined throughput capacity of approximately 3.2 million barrels per day [4][5] - The company also produces low-carbon fuels through its joint venture in Diamond Green Diesel Holdings LLC, with a production capacity of about 1.2 billion gallons per year [5]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores are designed to help investors identify stocks with the potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score emphasizes finding undervalued stocks based on financial ratios [3] - Growth Score assesses a company's future earnings and financial health [4] - Momentum Score identifies trends in stock prices and earnings estimates [5] - VGM Score combines all three styles to provide a comprehensive evaluation of stocks [6] Zacks Rank and Style Scores Interaction - The Zacks Rank uses earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.93% since 1988 [7] - There are over 800 stocks rated 1 or 2, making it essential to utilize Style Scores for better stock selection [8] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [9] Stock Highlight: Valero Energy - Valero Energy Corporation is the largest independent refiner and marketer of petroleum products in the U.S., with a refining capacity of 3.1 million barrels per day [11] - Valero is rated 2 (Buy) on the Zacks Rank and has a VGM Score of A [11] - The company has shown positive momentum, with a 1.3% increase in shares over the past four weeks and upward revisions in earnings estimates [12] - The Zacks Consensus Estimate for Valero's earnings has increased by $1.73 to $8.83 per share, with an average earnings surprise of +138.8% [12]

Core Insights - RS Investments' "RS Large Cap Value Strategy" underperformed the Russell 1000 Value Index in Q3 2025, returning 4.47% net compared to the Index's 5.33% [1] - Adverse stock selection in the Consumer Discretionary and Consumer Staples sectors negatively impacted the portfolio's performance [1] Company Focus: Valero Energy Corporation (NYSE:VLO) - Valero Energy Corporation manufactures and distributes petroleum-based and low-carbon liquid transportation fuels, with a one-month return of 2.40% and a 52-week gain of 36.34% [2] - As of October 27, 2025, Valero's stock closed at $174.35 per share, with a market capitalization of $53.178 billion [2] - Valero operates 15 petroleum refineries and 12 ethanol plants, focusing on optimizing return on invested capital and generating strong free cash flow [3] - The company benefits from a lower cost base due to U.S. natural gas and has gained from industry consolidation and the closure of high-cost refineries [3] - RS Investments continues to hold Valero shares, anticipating further outperformance [3] Hedge Fund Interest - Valero Energy Corporation was held by 55 hedge fund portfolios at the end of Q2 2025, unchanged from the previous quarter [4] - While Valero is recognized for its potential, certain AI stocks are viewed as having greater upside potential and lower downside risk [4]

Core Viewpoint - Valero Energy is proceeding with the closure of its 145,000 bbl/day Benicia refinery in California by next spring after discussions with state officials regarding alternatives to keep the facility operational [3] Group 1 - The Benicia refinery has a capacity of 145,000 barrels per day [3] - The closure is expected to take place by next spring [3] - Discussions with state officials were held to explore options for keeping the refinery running [3]

Group 1 - Refiners have emerged as significant winners in the energy sector this year, as highlighted by Valero's earnings report [2] - The positive trend for refiners is expected to continue based on the current market conditions [2]

Financial Performance - Revenues for Q3 2025 were $32,168 million, a decrease of 2.1% from $32,876 million in Q3 2024[12] - Net income attributable to Valero Energy Corporation stockholders for Q3 2025 was $1,095 million, compared to $364 million in Q3 2024, representing a significant increase of 200.3%[12] - Earnings per common share for Q3 2025 were $3.54, up from $1.14 in Q3 2024, reflecting a growth of 210.5%[12] - Comprehensive income attributable to Valero Energy Corporation stockholders for Q3 2025 was $940 million, compared to $706 million in Q3 2024, an increase of 33.0%[14] - For the nine months ended September 30, 2025, net income attributable to stockholders was $1.2 billion, a decrease of $1.3 billion compared to $2.5 billion in the same period of 2024, primarily due to a decrease in operating income of $1.8 billion[128] - Total revenues for the nine months ended September 30, 2025, were $99,125 million, a decrease from $99,125 million in the same period of 2024[76] Operating Income - Operating income for Q3 2025 was $1,509 million, significantly higher than $507 million in Q3 2024, marking an increase of 196.1%[12] - Operating income for the refining segment in Q3 2025 was $1.61 billion, an increase of $1.045 billion from $565 million in Q3 2024, driven by higher gasoline and distillate margins[126][127] - Total company operating income for the first nine months of 2025 was $1.606 billion, down from $3.407 billion in 2024[182] - Refining segment operating income decreased by $1.188 billion to $2.346 billion, with adjusted operating income showing a slight decrease of $7 million[164] Assets and Liabilities - Total assets decreased to $58,615 million as of September 30, 2025, down from $60,143 million at the end of 2024[10] - Total current liabilities decreased to $14,729 million as of September 30, 2025, compared to $15,495 million at the end of 2024, a reduction of 4.9%[10] - The company’s total equity decreased to $26,746 million as of September 30, 2025, down from $27,521 million at the end of 2024[10] - Total liabilities were reported at $482 million, including commodity derivative contracts of $341 million[88] Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2025, totaled $3,769 million, down from $5,613 million in 2024, a decline of about 32.8%[22] - Cash generated from operations during the first nine months of 2025 was $3.8 billion, with $1.5 billion allocated to capital investments and $2.6 billion returned to stockholders[124] - The company made $1.4 billion in investments, primarily consisting of $1.5 billion in capital investments, with $158 million related to DGD[194] Impairment Losses - The company reported an asset impairment loss of $1,131 million for the nine months ended September 30, 2025, with no such loss reported in the same period of 2024[12] - The company recognized a combined asset impairment loss of $1.1 billion related to the Benicia and Wilmington refineries due to non-recoverable carrying values[174] Segment Performance - The Refining segment generated revenues of $30,415 million for the three months ended September 30, 2025, compared to $31,335 million in the same period of 2024, indicating a decrease of 2.9%[71] - The Ethanol segment reported revenues of $1,035 million for the three months ended September 30, 2025, compared to $912 million in the same period of 2024, marking an increase of 13.5%[71] - The Renewable Diesel segment reported revenues of $719 million for the three months ended September 30, 2025, compared to $632 million in the same period of 2024, indicating an increase of 13.8%[71] Shareholder Returns - The company paid dividends on common stock totaling $1,061 million for the nine months ended September 30, 2025, compared to $1,045 million in 2024, reflecting a slight increase of 1.5%[22] - The company purchased 5,667,134 shares for treasury during the three months ended September 30, 2025[49] - The remaining authorization for share repurchase programs as of September 30, 2025, was $2,811 million[50] Future Outlook and Strategic Plans - The company plans to cease refining operations at its Benicia Refinery by the end of April 2026, following strategic evaluations due to operational restrictions in California[33] - Valero's management anticipates future refining segment margins to be influenced by global geopolitical tensions and market dynamics[113] - The company expects to incur approximately $1.9 billion for capital investments attributable to Valero during 2025, with $1.6 billion allocated for sustaining the business[207] Market Conditions - Global demand for gasoline, diesel, and jet fuel continues to rise, with jet fuel demand outpacing other petroleum-based transportation fuels[132] - Crude oil differentials are expected to widen due to increased sour crude oil production from OPEC+ suppliers, with potential volatility from geopolitical factors[132] - Renewable diesel demand is expected to remain consistent with current levels, while ethanol demand is anticipated to follow typical seasonal patterns[132]

Core Insights - Valero Energy Corporation (VLO) reported third-quarter 2025 adjusted earnings of $3.66 per share, exceeding the Zacks Consensus Estimate of $2.95, and significantly up from $1.16 per share in the same quarter last year [1][9] - Total revenues for the quarter decreased to $32.2 billion from $32.9 billion year-over-year, but still surpassed the Zacks Consensus Estimate of $29.8 billion [1][2] Financial Performance - The better-than-expected results were driven by increased refining margins, higher ethanol margins, and lower total cost of sales, although these were partially offset by a decline in renewable diesel sales volumes [2] - Adjusted operating income in the Refining segment rose to $1,665 million from $568 million year-over-year, supported by higher refining margins per barrel [3] - The Ethanol segment reported an adjusted operating profit of $183 million, up from $153 million in the prior-year quarter, aided by higher ethanol margins [3] Segment Analysis - The Renewable Diesel segment experienced an operating loss of $28 million, down from an operating income of $35 million in the previous year, with sales volumes declining to 2,717 thousand gallons per day from 3,544 thousand gallons [4] - Valero's refining throughput volumes increased to 3,087 thousand barrels per day, up from 2,884 thousand barrels per day year-over-year, exceeding estimates [5][9] - The Gulf Coast region contributed 60% to the total throughput volume, with other regions accounting for the remainder [6] Cost and Margins - Refining margins per barrel improved to $13.14 from $9.09 year-over-year, while refining operating expenses per barrel were slightly lower at $4.71 compared to $4.73 in the prior-year quarter [7] - Total cost of sales decreased to $30,396 million from $32,122 million year-over-year, attributed to a fall in the cost of materials [10] Capital Investment and Financial Position - Capital investment for the third quarter totaled $409 million, with $364 million allocated for sustaining the business [11] - As of September 30, 2025, Valero had cash and cash equivalents of $4.8 billion, total debt of $8.4 billion, and finance-lease obligations of $2.2 billion [11]