Editor's note: This story has been edited to clarify the nature and ownership of the LYONDELL-CITGO Refinery, which Valero declined to acquire.

Valero's (NYSE:VLO) an undeniably great company -- so why has its stock price languished since the first part of August? The company reached $70.75 per share in April, but it's now selling around $52. The last two quarters were solidly profitable with shareholder-friendly buybacks, but buyers remain relatively scarce. The reason why may be hidden in the company's growth statistics.

Valero makes its living exploiting the wide discount between light sweet crude and heavy sour crude. That disparity provides excellent margins on its refinery products, including gasoline, diesel, and heating oil. The company and its shareholders have prospered, as Valero astutely focused its efforts on the vastly cheaper heavy sour crude, giving it incredible margins per barrel. Refining the heavy, sulfur-laden crude oil is expensive, but the company has invested in heavy refining equipment and made shrewd acquisitions over the last several years to increase its capacity. The acquisitions, along with smart capital spending, put Valero firmly on top of the refinery segment.

The recent price decline coincided with a significant downturn in gasoline and distillate margins. That trend continued through most of the third quarter, dragging Valero's stock with it. The financial press reported soaring third-quarter profits, but to understand what may be weighing on investors' minds -- beyond the temporary margin decline -- we want to look at organic growth.

Compare those surging profits in Q3 2006 to the same quarter in 2005 -- but first, subtract one-time events and the uneven contribution of the acquisition of Premcor. Premcor added three months of revenue in 2006, and only one month in 2005. Here's how the numbers look:

Q3 2006

Q3 2005

Operating income

$2,333

$1,311

Net income

$1,603

$862

Margin per barrel

$12.98

$13.43

Growth in operating income

77.9%

Growth in net income

85.9%

Without Premcor:

Operating income

$1,616

$973

Net income

$1,168

$668

Growth in operating income

66.1%

Growth in net income

74.8%
Data from company reports and communications with Valero investor relations.
Dollars in millions.

Now, for a true apples-to-apples comparison, we must adjust operating income for the following one-time events: a $621 million non-cash charge in 2005 for purchased inventory, and $150 million in hurricane-related losses and damages.

When we add those back to the Q3 2005 operating income, minus the $973 million Premcor contributed, adjusted operating income becomes $1.744 billion for 2005. It then shrinks to $1.616 billion for 2006. That negative organic growth may be the additional reason for investors' concern.

With the possibility of building new refineries thoroughly blocked by NIMBY (Not in My Backyard) and BANANA (Build Absolutely Nothing Anywhere Near Anyone) sentiments among the American public, companies like Valero must increase capacity by acquisition, or by organic growth through refinery upgrades and more efficient operations.

Acquisitions may be the more difficult approach to growth, if recent history is any guide. Valero, showing admirable restraint and business acumen, passed on aquiring the LYONDELL-CITGO Refinery, a subsidiary of Lyondell Chemical (NYSE:LYO), as private equity investors bid it up to $20,000 per barrel (Valero paid approximately $8,000 per barrel, excluding debt, for Premcor). Valero has made brilliant acquisitions in the past, and it's now seeking to improve operations at a refinery level. At current prices per share, management's predicted 20% return on refinery upgrades might still make Valero one of the best blue chips of 2007, even without acquisitions.

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Fool contributor Jean Graham does not own any stocks mentioned. The Motley Fool has a disclosure policy.