Marathon and Valero: Why Barron's Sees More Upside After $8.8B Quarter

Marathon Petroleum and Valero Energy combined for roughly $8.8 billion in profit in the second quarter of 2026, comfortably beating Wall Street expectations. Both stocks have more than doubled since the start of the year.

A Barron's report published August 21 argues the rally still has room. The surge in refining margins is rooted in permanent capacity losses across Europe and the United States, the report said. Several US refineries have closed or shifted to renewable diesel production. European plants shuttered under stricter environmental rules. Ukrainian strikes on Russian refineries and the Middle East conflict further constrained global output. Barron's wrote that "even if a peace deal is achieved and crude prices normalize, the limited refining capacity could continue to support the high gasoline and diesel margins."

Valero is particularly exposed to the European fuel market. Chief Operating Officer Gary Simmons told analysts on the earnings call that a jet fuel export arbitrage has reopened, giving Valero an additional outlet. The company expects jet fuel margins to improve in the second half of the third quarter as refiners switch to winter diesel specifications.

Marathon Petroleum, the largest US refiner by volume, enjoys strong operating leverage when crack spreads expand. Its refining margins doubled in the second quarter, driving a nearly fourfold increase in net income. Marathon also holds about 64% of MPLX, which operates stable midstream infrastructure. The MPLX stake generates steady cash flows that can offset refining cyclicality, Barron's noted.

Shareholder returns provide another catalyst. TD Cowen analyst Jason Gabelman said Marathon and Valero are expected to repurchase roughly 20% of their market capitalization from the third quarter through 2027, lifting per-share earnings.

The main risk is that current margins reflect extraordinary conditions that could normalize quickly if refined product supplies recover. Barron's warned that after Valero's 111% gain and Marathon's 118% gain since January, even a modest decline in crack spreads could trigger a substantial valuation correction.

AlphaScala's proprietary scorecard rates Marathon at 60 out of 100, Moderate (details on MPC stock page), and Valero at 56, also Moderate. The Energy sector also includes Chevron at 66.