Well, I declare-o, Valero (NYSE:VLO), your sledgehammer smarts when it smashes Foolish hearts.

Valero's move to dilute shareholder equity by almost 8%, announced in the same breath as a massive reduction in second-quarter profit guidance -- from a $0.59-per-share gain to a $0.50 loss -- pains investors like a one-two punch from Mike Tyson. Come on, Valero, you might as well bite our ear off, too!

Raising capital from shareholders is all the rage on Wall Street these days. The banks have made a withdrawal to the tune of $65 billion. DryShips (NYSE:DRYS) is laughing all the way to the bank after quadrupling its share count. And Tyrannosaurus Terex is on the capital prowl.

Fellow refiners Holly (NYSE:HOC), Western Refining (NYSE:WNR), and Tesoro (NYSE:TSO) have each announced offerings of their own, so perhaps Valero just wanted to join the party. But if you wake up the next morning with two black eyes and one ear, it probably wasn't much of a party at all. Wall Street is living it up, but I fear shareholders will suffer the hangover.

On the other hand, while the banks are likely to shovel raised capital into their bottomless pits of toxic derivatives exposure, at least Valero is trying to refine wine from sour grapes by investing in assets which the company believes will fuel long-term growth prospects.

Valero purchased seven ethanol plants from bankrupt VeraSun Energy for $477 million in March, and recently agreed to buy a 45% stake in a 190,000-barrels-per-day Dutch refinery from Dow Chemical (NYSE:DOW) for $600 million, excluding working capital. Europe's largest refiner, Total SA (NYSE:TOT), remains the majority stakeholder and operator of that facility.

Meanwhile, Valero's $640 million disappointment -- from analyst expectations of $0.74 per share earnings in the second quarter to the new guidance for a $0.50 loss -- certainly warrants a closer look at the operational aspects of the business. The company cited extended maintenance-related downtime at two refineries as a major factor, which implies a merely temporary hit, since both facilities are now back online or in the process of coming online.

More troubling for operations going forward, however, is the report of weak discounts for sour crude ... a primary source of Valero's competitive advantage.

I swear-o, Valero, you may have chewed off our ears, but we still have our eyes on you.

Further Foolishness:

More than 4,200 CAPS members, including 1,294 All-Stars, expect four-star Valero to outperform the S&P 500. Will you follow these Fools, or blaze your own trail? Join the free CAPS community today and share your own thoughts about Valero.

Total SA is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool owns shares of Terex.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. The Motley Fool has a disclosure policy.