Valero Energy Corporation (NYSE:VLO) reported its Q2 results, with EPS of $11.36 coming in better than the consensus estimate of $9.14. Revenue was $51.64 billion, compared to the consensus estimate of $40.73 billion.

As expected, the refining segment posted a strong quarter given the elevated crack environment and high utilization of 94% during Q2, which resulted in significant cash generation. Refining margins in the quarter were supported by strong product demand and low inventories. Additionally, US refineries continue to have cost advantages over global competitors given differences in energy costs.

According to the analysts at RBC Capital, the big EPS beat (which is allowing continued balance sheet improvements and a materially higher pace of stock buybacks), coupled with a potentially higher structural mid cycle provide support and upside to the company’s valuation.

The analysts raised their price target to $143 from $141, while maintaining their outperform rating.