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Vlo stock forecast energy market analysts project Brent
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Energy market analysts project Brent crude to average $88 in 2024, keeping refining economics attractive. The VLO stock forecast factors in sustained international diesel shortages benefiting export margins. Valero Energy Corporation (NYSE:VLO) is among the biggest independent refiners in the US. It runs 15 refineries in the US, Canada, and the UK, with a daily throughput capacity of 3.2 million barrels. The firm also has 12 ethanol plants with a combined capacity of 1.6 billion gallons per year, as well as a 50% investment in Diamond Green Diesel, which can create 1.2 billion gallons of renewable diesel annually. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Based on recent Q1 earnings, VLO posted revenue of $35.4B, beating consensus by 3%. The forecast for VLO stock suggests upside potential as refining capacity utilization surpasses 93%, indicating robust operational efficiency amid tight global diesel supplies.