Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Valero Energy Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -4.4% to 5.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 30, DPO 35, DIO 21). At a 7.3% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $264.32 per share, suggesting VLO is fairly valued by 6.5% at the current price of $248.10.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 5,501 | 5,398 | 5,348 | 7,058 | 7,429 | 7,615 |
| (−) Net Interest | 502 | 492 | 488 | 644 | 678 | 695 |
| (+) D&A | 1,192 | 1,065 | 931 | 949 | 1,032 | 1,058 |
| EBITDA | 7,194 | 6,955 | 6,767 | 8,651 | 9,139 | 9,367 |
| (−) Tax | 1,157 | 1,135 | 1,125 | 1,484 | 1,562 | — |
| (−) CapEx | 1,030 | 1,011 | 1,002 | 1,322 | 1,391 | — |
| (−) ΔWC | -2,185 | -101 | -48 | 1,681 | 364 | — |
| Free Cash Flow (FCF) | 7,193 | 4,910 | 4,689 | 4,165 | 5,821 | — |
| Peers' EBITDA Multiple | 9.8x | |||||
| Terminal Value | 92,175 | |||||
| WACC / Discount Rate | 7.30% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,944 | 4,417 | 3,931 | 3,254 | 4,239 | 64,793 |
| Enterprise Value | 87,578 | |||||
| Projection Period | 22,785 | 26.0% | ||||
| Terminal Value | 64,793 | 74.0% | ||||
| (−) Current Net Debt | 5,931 | |||||
| Equity Value | 81,647 | |||||
| (÷) Outstanding Shares | 309M | |||||
| Fair Price | $264 | +6.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.8x | 7.8x | 9.8x | 11.8x | 13.8x |
|---|---|---|---|---|---|
| 5.3% | $195 | $241 | $288 | $335 | $382 |
| 6.3% | $187 | $231 | $276 | $321 | $365 |
| 7.3% | $179 | $222 | $264 | $307 | $350 |
| 8.3% | $172 | $213 | $253 | $294 | $335 |
| 9.3% | $165 | $204 | $243 | $282 | $321 |
Current price: $248.10. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.