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

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Valero Energy Corporation (VLO - Free Report) is set to report fourth-quarter 2020 results on Jan 28, before the opening bell.

In the last reported quarter, the leading refiner beat the Zacks Consensus Estimate for the bottom line on a rise in renewable diesel sales volumes and lower corn prices in the Ethanol unit. Notably, Valero Energy surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 96.5%, as shown in the chart 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 this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter loss per share of $1.50 has witnessed three downward revisions and four upward revisions in the past 30 days. The estimated figure suggests a decline of 170.4% from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $18.3 billion indicates a 34.3% decline from the year-ago reported figure.

Factors to Consider

With refining contributing the most among all operating segments of Valero, which is one of the largest refiners in North America, weaker refined petroleum products demand, owing to the coronavirus pandemic, is likely to have hurt the company’s fourth-quarter profit and lowered total throughput volumes.

The Zacks Consensus Estimate for the total refining throughput volumes is pegged at 2,522 thousand barrels per day (MBbls/d), indicating a decline from the year-ago quarter’s 3,018 MBbls/d. As such, the Zacks Consensus Estimate for operating loss from the Refining segment is pegged at $533 million, suggesting a decrease from a profit of $1,419 million in the year-ago quarter. This might have affected the company’s fourth-quarter bottom line.

Earnings Whispers

Our proven model does not indicate 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 chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of $1.50 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Valero Energy currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

While an earnings beat looks uncertain for Valero Energy, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Diamondback Energy, Inc. (FANG - Free Report) has an Earnings ESP of +2.96% and a Zacks Rank of #2. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson-UTI Energy, Inc. (PTEN - Free Report) has an Earnings ESP of +4.99% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Feb 4.

RPC, Inc. (RES - Free Report) has an Earnings ESP of +30.23% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan 27.

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