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Valero Energy (VLO) Up 9.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Valero Energy (VLO - Free Report) . Shares have added about 9.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Valero Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Valero Beats Q3 Earnings & Revenues Estimates
Valero reported third-quarter 2022 adjusted earnings of $7.14 per share, significantly improving from $1.22 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $7 per share.
Total quarterly revenues increased from $29,520 million in the prior-year quarter to $44,454 million. The top line also surpassed the Zacks Consensus Estimate of $39,015 million.
The strong quarterly results have been driven by increased refinery throughput volumes and a higher refining margin.
Segmental Performance
Adjusted operating income in the Refining segment amounted to $3,816 million, improving from $911 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.
In the Ethanol segment, Valero reported an adjusted operating profit of $1 million, down from $4 million in the year-ago quarter. Lower ethanol production volumes hurt the segment. Production declined to 3,498 thousand gallons per day from 3,625 thousand gallons a year ago.
Operating income in the Renewable Diesel segment increased to $212 million from $109 million in the year-ago quarter. Renewable diesel sales volumes increased to 2,231 thousand gallons per day from 671 thousand gallons a year ago.
Throughput Volumes
For the quarter, Valero’s refining throughput volumes were 3,005 thousand barrels per day (MBbls/d), up from 2,864 MBbls/d reported in the third quarter of 2021.
In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 49.2%, 16.5% and 10.8%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, and blendstocks and others.
The Gulf Coast contributed 60.3% to the total throughput volume. Mid-Continent, North Atlantic, and West Coast regions accounted for 14.7%, 15.9% and 9.1%, respectively, of the total throughput volume.
Throughput Margins
The refining margin per barrel of throughput significantly increased to $21.34 from the year-ago level of $10.07. Refining operating expenses per barrel of throughput was $5.48 compared with $4.53 in the year-ago quarter.
Depreciation and amortization expenses declined to $2.06 a barrel from $2.08 in the prior-year quarter. As such, Valero’s adjusted refining operating income was $13.80 per barrel of throughput compared with $3.46 in the prior-year quarter.
Cost of Sales
Valero’s total cost of sales surged to $40,431 million in the third quarter from the year-ago figure of $28,602 million primarily due to higher material costs and operating expenses.
Capital Investment & Balance Sheet
The third-quarter capital investment was $602 million. Of the total, $185 million was allotted for sustaining the business.
At the third-quarter end, the company had cash and cash equivalents of $3,969 million. As of Sept 30, 2022, it had total debt and finance lease obligations of $11,576 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 20.69% due to these changes.
VGM Scores
Currently, Valero Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Valero Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Valero Energy (VLO) Up 9.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Valero Energy (VLO - Free Report) . Shares have added about 9.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Valero Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Valero Beats Q3 Earnings & Revenues Estimates
Valero reported third-quarter 2022 adjusted earnings of $7.14 per share, significantly improving from $1.22 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $7 per share.
Total quarterly revenues increased from $29,520 million in the prior-year quarter to $44,454 million. The top line also surpassed the Zacks Consensus Estimate of $39,015 million.
The strong quarterly results have been driven by increased refinery throughput volumes and a higher refining margin.
Segmental Performance
Adjusted operating income in the Refining segment amounted to $3,816 million, improving from $911 million in the year-ago quarter. Higher refinery throughput volumes aided the segment.
In the Ethanol segment, Valero reported an adjusted operating profit of $1 million, down from $4 million in the year-ago quarter. Lower ethanol production volumes hurt the segment. Production declined to 3,498 thousand gallons per day from 3,625 thousand gallons a year ago.
Operating income in the Renewable Diesel segment increased to $212 million from $109 million in the year-ago quarter. Renewable diesel sales volumes increased to 2,231 thousand gallons per day from 671 thousand gallons a year ago.
Throughput Volumes
For the quarter, Valero’s refining throughput volumes were 3,005 thousand barrels per day (MBbls/d), up from 2,864 MBbls/d reported in the third quarter of 2021.
In terms of feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 49.2%, 16.5% and 10.8%, respectively, of the total volume. The remaining volume came from residuals, other feedstock, and blendstocks and others.
The Gulf Coast contributed 60.3% to the total throughput volume. Mid-Continent, North Atlantic, and West Coast regions accounted for 14.7%, 15.9% and 9.1%, respectively, of the total throughput volume.
Throughput Margins
The refining margin per barrel of throughput significantly increased to $21.34 from the year-ago level of $10.07. Refining operating expenses per barrel of throughput was $5.48 compared with $4.53 in the year-ago quarter.
Depreciation and amortization expenses declined to $2.06 a barrel from $2.08 in the prior-year quarter. As such, Valero’s adjusted refining operating income was $13.80 per barrel of throughput compared with $3.46 in the prior-year quarter.
Cost of Sales
Valero’s total cost of sales surged to $40,431 million in the third quarter from the year-ago figure of $28,602 million primarily due to higher material costs and operating expenses.
Capital Investment & Balance Sheet
The third-quarter capital investment was $602 million. Of the total, $185 million was allotted for sustaining the business.
At the third-quarter end, the company had cash and cash equivalents of $3,969 million. As of Sept 30, 2022, it had total debt and finance lease obligations of $11,576 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 20.69% due to these changes.
VGM Scores
Currently, Valero Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Valero Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.