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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Equity Bottom-Up

<ul><li>New York awarded 1.7 GW of renewable and energy storage projects backed by more than US$3.7 billion in investment, targeting operation by 2030.</li><li>Meanwhile, the Trump administration is preparing to relax federal fuel economy standards, lowering the 2031 target to 34.5 mpg and rolling back EV-supportive policies, drawing criticism from environmental groups.</li><li>The EPA also proposed repealing Biden-era power plant rules that required carbon capture or closure, a move advocates say could raise emissions, notably in Georgia. </li></ul>

New York awarded 1.7 GW of renewable and energy storage projects backed by more than US$3.7 billion in investment, targeting operation by 2030.Meanwhile, the Trump administration is preparing to relax federal fuel economy standards, lowering the 2031 target to 34.5 mpg and rolling back EV-supportive policies, drawing criticism from environmental groups.The EPA also proposed repealing Biden-era power plant rules that required carbon capture or closure, a move advocates say could raise emissions, notably in Georgia. 

Sustainable Investing Surveyor : Focus on VLO: Strong Position with Heavy-Crude Advantage...

<div><ul><li>VLO posted a beat across every operating segment. 1Q26 operating income of $1.73B exceeded $1.40B FactSet consensus: Refining $1.83B (vs. $1.49B), Ethanol $90MM (vs. $50.5MM), Renewable Diesel $139MM (vs. $89.7MM).</li><li>Refining throughput of 2.94 Mbbl/d topped 2.84 Mbbl/d at $14.9/bbl gross margin (vs. $13.5/bbl). Net income was $1.3B, or $4.22 per share.</li><li>Results were up Y/Y from loss in 1Q25 as Hormuz dislocations and heavy sour discounts powered the Gulf Coast. </li></ul></div>

VLO posted a beat across every operating segment. 1Q26 operating income of $1.73B exceeded $1.40B FactSet consensus: Refining $1.83B (vs. $1.49B), Ethanol $90MM (vs. $50.5MM), Renewable Diesel $139MM (vs. $89.7MM).Refining throughput of 2.94 Mbbl/d topped 2.84 Mbbl/d at $14.9/bbl gross margin (vs. $13.5/bbl). Net income was $1.3B, or $4.22 per share.Results were up Y/Y from loss in 1Q25 as Hormuz dislocations and heavy sour discounts powered the Gulf Coast. 

VLO: 1Q26 Results; Sweeping Beat as Hormuz Tightens Markets and Heavy Sour Powers Margins

Thematic (Sector/Industry)

<div><ul><li>The liquid renewable fuels sector has entered 2H26 in the strongest position it has occupied in years. </li><li>Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance sheets are healthier, and carbon credit revenue is maturing into a durable earnings stream that stands apart from physical fuel.</li><li>In this report, we walk through the five most resounding themes from companies’ interim results and recent WTR events, illustrated with company-level evidence and near-term catalysts with our thoughts on what we’re watching in the coming weeks for investors to follow.</li></ul></div>

The liquid renewable fuels sector has entered 2H26 in the strongest position it has occupied in years. Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance sheets are healthier, and carbon credit revenue is maturing into a durable earnings stream that stands apart from physical fuel.In this report, we walk through the five most resounding themes from companies’ interim results and recent WTR events, illustrated with company-level evidence and near-term catalysts with our thoughts on what we’re watching in the coming weeks for investors to follow.

WTR Circular Carbon Focus Report : Five Key Themes Driving Liquid Renewable Fuels

<ul><li>4Q25 results beat consensus analyst forecasts. </li><li>Results reflected robust market demand coupled with Valero’s operational efficiency. </li><li>The strong performance was fueled by record refining and ethanol volumes and improved margins, with its oil refining margin up 62% Y/Y to $13.6 per barrel. </li></ul>

4Q25 results beat consensus analyst forecasts. Results reflected robust market demand coupled with Valero’s operational efficiency. The strong performance was fueled by record refining and ethanol volumes and improved margins, with its oil refining margin up 62% Y/Y to $13.6 per barrel. 

VLO: Beats Expectations Again in 4Q25; Ready to Hike Venezuelan Crude Throughput - 30 January 2026

<div><ul><li>Valero Energy Corporation (NYSE: VLO) is one of the world’s largest and most efficient producers of downstream oil products and low-carbon transport fuels. </li><li>Its diversified low-carbon fuels business offers multiple future pathways for growth and its low-cost oil refining operations lead the US refining industry on margins.</li><li>Valero’s 3Q25 results exceeded analyst expectations. Valero reported net income attributable to stockholders of $1.1 billion, or $3.53 per share.</li></ul></div>

Valero Energy Corporation (NYSE: VLO) is one of the world’s largest and most efficient producers of downstream oil products and low-carbon transport fuels. Its diversified low-carbon fuels business offers multiple future pathways for growth and its low-cost oil refining operations lead the US refining industry on margins.Valero’s 3Q25 results exceeded analyst expectations. Valero reported net income attributable to stockholders of $1.1 billion, or $3.53 per share.

VLO: 3Q25 Results; All Business Segments Beat; Management Affirms Positive Outlook

United States

Valero Energy Corporation is an independent petroleum refining and marketing company that owns and operates refineries in the United States, Canada, and Aruba.  The Company produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products as well as diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel, and oxygenates.

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Valero Energy (VLO US)

Sustainable Investing Surveyor : Focus on VLO: Strong Position with Heavy-Crude Advantage...

New York awarded 1.7 GW of renewable and energy storage projects backed by more than US$3.7 billion in investment, targeting operation by 2030.

Water Tower Research

VLO: 1Q26 Results; Sweeping Beat as Hormuz Tightens Markets and Heavy Sour Powers Margins

Refining throughput of 2.94 Mbbl/d topped 2.84 Mbbl/d at $14.9/bbl gross margin (vs. $13.5/bbl). Net income was $1.3B, or $4.22 per share.

Water Tower Research

WTR Circular Carbon Focus Report : Five Key Themes Driving Liquid Renewable Fuels

Margins across renewable diesel (RD), biodiesel, sustainable aviation fuel (SAF), and low-carbon ethanol are running near multi-year highs, balance...

Water Tower Research

VLO: Beats Expectations Again in 4Q25; Ready to Hike Venezuelan Crude Throughput - 30 January 2026

4Q25 results beat consensus analyst forecasts. Results reflected robust market demand coupled with Valero’s operational efficiency.

Water Tower Research

VLO: 3Q25 Results; All Business Segments Beat; Management Affirms Positive Outlook

Valero Energy Corporation (NYSE: VLO) is one of the world’s largest and most efficient producers of downstream oil products and low-carbon...

Water Tower Research

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