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Can High Demand Lead to Strong Q2 Earnings for Valero (VLO)?

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Valero Energy Corporation (VLO - Free Report) is set to report second-quarter 2022 results on Jul 28, before the opening bell.

In the last reported quarter, the leading refiner reported adjusted earnings of $2.31 per share, beating the Zacks Consensus Estimate of $1.61 per share due to increased refinery throughput volumes and a higher refining margin.

In the trailing four quarters, Valero beat the Zacks Consensus Estimate for the bottom line, delivering an earnings surprise of 84.3%, on average. 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 delve into the factors that are anticipated to have influenced the downstream operator’s performance in the June-end quarter.

Estimate Trend

The Zacks Consensus Estimate for second-quarter earnings per share of $8.78 has witnessed five upward revisions and no downward movement in the past 30 days. The consensus estimate suggests a year-over-year increase of 1,729.2%.

The Zacks Consensus Estimate for the to-be-reported quarter’s revenues of $39.7 billion indicates a 43% improvement from the year-ago reported figure.

Earnings Whispers

Our proven model conclusively 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.

Earnings ESP: Valero has an Earnings ESP of +10.22%. This is because the Most Accurate Estimate is currently pegged at earnings of $9.67 per share, whereas the Zacks Consensus Estimate is pinned at $8.78 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Valero currently flaunts a Zacks Rank #1.

Factors to Consider

In the June-end quarter, the demand for refined petroleum products improved significantly due to a considerable improvement in fuel consumption on the back of strong travel demand. This is likely to have favored Valero since it has ownership interests in 15 petroleum refineries in the United States, Canada and the U.K. Notably, the combined throughput capacity of the refineries is 3.2 million barrels per day.

With higher commodity prices, the favorable margin scenario is likely to have continued in the to-be-reported quarter. The Zacks Consensus Estimate for VLO’s refining margin per barrel of throughput is pegged at $22.24, suggesting a significant improvement from $7.64 reported in the year-ago quarter.

Other Stocks That Warrant a Look

Here are some other companies from the Energy space that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Suncor Energy, Inc. (SU - Free Report) has an Earnings ESP of +11.91% and is a Zacks #1 Ranked player at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Suncor is scheduled to release second-quarter results on Jul 27. The Zacks Consensus Estimate for SU’s quarterly earnings is pegged at $1.74 per share, suggesting an increase of 346.2% from the prior-year reported figure.

PBF Energy Inc. (PBF - Free Report) has an Earnings ESP of +20.67% and is a Zacks #1 Ranked player at present.

PBF Energy is scheduled to release second-quarter results on Jul 28. The Zacks Consensus Estimate for PBF’s quarterly earnings is pegged at $6.57 per share, suggesting a massive improvement from the prior-year figure.

Hess Corporation (HES - Free Report) has an Earnings ESP of +3.73% and is a Zacks #2 Ranked player at present.

Hess is scheduled to release second-quarter results on Jul 27. The Zacks Consensus Estimate for HES’ quarterly earnings is pegged at $2.05 per share, suggesting an increase of 754.2% from the prior-year figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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