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What's in Store for Tesoro Corp (TSO) this Earnings Season?
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Independent oil refiner and marketer Tesoro Corp. is set to release fourth-quarter 2016 results after the closing bell on Monday, Feb 1.
In the preceding three-month period, the San Antonio, TX-based downstream operator delivered a positive earnings surprise of 0.70%. Significant contribution from the logistics segment supported the company’s performance.
Coming to earnings surprise history, the company has a good record. The company beat estimates in three of the last four quarters with an average positive surprise of 24.90%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Tesoro is one the largest independent oil refiners in the U.S. A major advantage for the company is the scale and diversification benefits offered by its portfolio of seven refineries. We also like the company's solid long-term competitive position in the supply-constrained California market.
Tesoro Corporation Price, Consensus and EPS Surprise
We view Tesoro's recent announcement to acquire fellow downstream operator Western Refining as positive, given the compelling strategic rationale of the transaction. Apart from bolstering its network of assets, the purchase will help Tesoro enhance its geographic footprint in the prolific Permian Basin, driving double-digit earnings growth in 2018.
Thus far, downstream operators (oil refiners and marketers) like Tesoro were benefiting from crude’s collapse. This is because these companies use oil as an input to derive refined petroleum products like gasoline, the prime transportation fuel in the U.S. Hence, lower the oil price, higher will be their profits.
However, the aforesaid factor has led to overproduction and stock build-up that now threatens to limit the profits of refiners. Consequently, margins have narrowed, forcing some of the operators to announce production cuts, postpone capital spending and retrench employees. Following a prolonged period of high differentials, crack spreads are set to weaken, which will lead to deterioration in earnings and cash flows in the near term.
Earnings Whispers
Our proven model does not conclusively show that Tesoro will beat on estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to surpass estimates.
That is not the case here as you will see below.
Zacks ESP:Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 16 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Tesoro has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Though an earnings beat looks uncertain for Tesoro, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:
Sprague Resources LP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings around Mar 9.
Pioneer Natural Resources Company (PXD - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings around Feb 7.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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What's in Store for Tesoro Corp (TSO) this Earnings Season?
Independent oil refiner and marketer Tesoro Corp. is set to release fourth-quarter 2016 results after the closing bell on Monday, Feb 1.
In the preceding three-month period, the San Antonio, TX-based downstream operator delivered a positive earnings surprise of 0.70%. Significant contribution from the logistics segment supported the company’s performance.
Coming to earnings surprise history, the company has a good record. The company beat estimates in three of the last four quarters with an average positive surprise of 24.90%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Tesoro is one the largest independent oil refiners in the U.S. A major advantage for the company is the scale and diversification benefits offered by its portfolio of seven refineries. We also like the company's solid long-term competitive position in the supply-constrained California market.
Tesoro Corporation Price, Consensus and EPS Surprise
Tesoro Corporation Price, Consensus and EPS Surprise | Tesoro Corporation Quote
We view Tesoro's recent announcement to acquire fellow downstream operator Western Refining as positive, given the compelling strategic rationale of the transaction. Apart from bolstering its network of assets, the purchase will help Tesoro enhance its geographic footprint in the prolific Permian Basin, driving double-digit earnings growth in 2018.
Thus far, downstream operators (oil refiners and marketers) like Tesoro were benefiting from crude’s collapse. This is because these companies use oil as an input to derive refined petroleum products like gasoline, the prime transportation fuel in the U.S. Hence, lower the oil price, higher will be their profits.
However, the aforesaid factor has led to overproduction and stock build-up that now threatens to limit the profits of refiners. Consequently, margins have narrowed, forcing some of the operators to announce production cuts, postpone capital spending and retrench employees. Following a prolonged period of high differentials, crack spreads are set to weaken, which will lead to deterioration in earnings and cash flows in the near term.
Earnings Whispers
Our proven model does not conclusively show that Tesoro will beat on estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to surpass estimates.
That is not the case here as you will see below.
Zacks ESP:Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 16 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Tesoro has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Though an earnings beat looks uncertain for Tesoro, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:
W&T Offshore, Inc. (WTI - Free Report) is expected to release fourth-quarter earnings results around Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sprague Resources LP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings around Mar 9.
Pioneer Natural Resources Company (PXD - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings around Feb 7.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>