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Valero Energy (VLO) to Post Q2 Earnings: Is a Beat in Store?

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Valero Energy Corporation (VLO - Free Report) is set to report second-quarter 2020 results on Jul 30, before the opening bell.

In the last-reported quarter, the leading refining company reported a profit of 34 cents per share against the Zacks Consensus Estimate of a loss of 15 cents, thanks to rise in renewable diesel sales volumes and lower operating expenses.

Notably, the company beat the Zacks Consensus Estimate for the bottom line in the prior four quarters, the average earnings surprise being 94.9%. This is depicted in the graph below:

Valero Energy Corporation Price and EPS Surprise

 

Valero Energy Corporation Price and EPS Surprise

Valero Energy Corporation price-eps-surprise | Valero Energy Corporation Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss of $1.42 per share has seen four upward revisions and three downward movements in the past 30 days. The figure suggests a year-over-year decline of 194.1%.

Further, the Zacks Consensus Estimate for revenues is pegged at almost $15.8 billion for the quarter, indicating a decline of 45.4% from the year-ago reported figure.

What Does the Zacks Model Say

Our proven model predicts an earnings beat for Valero Energy this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.   

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Valero Energy has an Earnings ESP of +0.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Factors to Consider

The second quarter has witnessed easing of lockdown measures that were taken to contain the coronavirus pandemic. This implied partial resumption of economic activity and thus some recovery in fuel demand since more people got back to work, especially in the months of May and June. The improvement in fuel demand is likely to have favored Valero Energy – touted as a leading international manufacturer and marketer of transportation fuels and petrochemical products.

Low input costs, since oil price was relatively low in the quarter, is also likely to have aided the refiner’s bottom line.

Other Stocks to Consider

Investors can also consider the following players from the energy space that also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Cabot Oil Gas Corporation (COG - Free Report) has an Earnings ESP of +5.00% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results after the closing bell on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Midstream Corporation (AM - Free Report) has an Earnings ESP of +27.87% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Jul 29.

Enbridge Inc (ENB - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 29.

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