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What's in the Cards for Valero Energy (VLO) in Q4 Earnings?

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Valero Energy Corporation (VLO - Free Report) is set to report fourth-quarter 2018 results on Jan 31, before market open.

The leading independent refining player surpassed the Zacks Consensus Estimate in the last four quarters, the average positive earnings surprise being 6.9%. Let’s see how things are shaping up prior to the announcement.

Which Way are Estimates Treading?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts feel about the upcoming earnings release.

The Zacks Consensus Estimate for fourth-quarter earnings of $1.04 has seen five upward revisions and one downward movement in the past 30 days. The figure reflects year-over-year decline of 10.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $29,071 million for the impending quarter, showing an increase of 10.2% year over year.

Factors to Consider

Valero Energy is among the leading independent refining players in the domestic market with 15 petroleum refineries.

The Zacks Consensus Estimate for fourth-quarter operating income in the refining segment is pegged at $981 million, reflecting a decline from $1,329 million in the last reported quarter but showing an increase from $982 million in the year-ago quarter.

Moreover, the Zacks Consensus Estimate for operating loss in the ethanol segment is pegged at $26.87 million, compared to operating income of $21.00 million in the preceding quarter and $37 million in the prior-year quarter.

The Zacks Consensus Estimate for operating income in the VLP segment is pegged at $85 million, showing a fall from $90 million the last reported quarter but indicating a rise from $80 million in the year-ago quarter.

The aforementioned parameters do not ensure better-than-expected performance by Valero Energy’s units in the to-be-reported quarter.

Earnings Whisper

Our proven model does not indicate a beat for Valero Energy. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.04.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Valero Energy carries a Zacks Rank #3.

Meanwhile, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.   

Stocks That Warrant a Look

Stocks in the energy sector that have a positive Earnings ESP and a favorable Zacks Rank are

Ensco plc is a leading supplier of offshore contract drilling services to the oil and gas industry. The company has an Earnings ESP of +1.8% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwestern Energy Company (SWN - Free Report) , based in Houston, TX, engages in the exploration, development and production of natural gas and crude oil in the United States. The company has an Earnings ESP of +2.3% and carries a Zacks Rank #3.

Fort Worth, TX-based Range Resources Corp (RRC - Free Report) is an independent oil and gas exploration and production company. The company has an Earnings ESP of +4.5% and a Zacks Rank #3.

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