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Valero Energy (VLO) Q4 Earnings: Is a Surprise in Store?
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Leading North American independent refiner and marketer of petroleum products, Valero Energy Corporation (VLO - Free Report) is set to report fourth-quarter 2016 results on Jan 31, before the market opens.
The company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average earnings beat of 13.06%. Let’s see how things are shaping up prior to the announcement.
Factors to Consider
Among independent refiners, Valero Energy offers the most diversified refinery base with a capacity of 3 million barrels per day in its 15 refineries across the U.S., Canada and the Caribbean. We note that the company is best positioned to profit from increased refining margins, mainly due to its strategic refinery structure that enables it to use cheaper oil for more than half of its needs.
The company’s price chart for the last three months shows significant strength. During the aforesaid period, Valero Energy gained almost 15% compared with only 9% improvement for the Zacks categorized Oil Refining & Marketing industry.
However, Valero Energy – the largest independent refiner in the country – remains exposed to the Brent-WTI spread, which was negative over a considerable portion of the fourth quarter. This may hurt the company’s margin
Moreover, improvement in crude prices following OPEC’s decision of production cut led to an increase in the input cost for refiners during the last month of the quarter.
Earnings Whispers
Our proven model does not conclusively show that Valero Energy is likely to beat earnings this quarter. That is because a stock needs to have both 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.
Zacks ESP: Valero Energy currently has an Earnings ESP of -5.20% as the Most Accurate Estimate of 73 cents is lower than the Zacks Consensus Estimate of 77 cents. 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, which increases the predictive power. However, the company’s negative Earnings ESP makes surprise prediction inconclusive.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Summit Midstream Partners, L.P. (SMLP - Free Report) has an Earnings ESP of +76.47% and a Zacks Rank #3.
Plains All American Pipeline, L.P. (PAA - Free Report) has an Earnings ESP of +26.53% and a Zacks Rank #2.
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In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Valero Energy (VLO) Q4 Earnings: Is a Surprise in Store?
Leading North American independent refiner and marketer of petroleum products, Valero Energy Corporation (VLO - Free Report) is set to report fourth-quarter 2016 results on Jan 31, before the market opens.
The company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average earnings beat of 13.06%. Let’s see how things are shaping up prior to the announcement.
Factors to Consider
Among independent refiners, Valero Energy offers the most diversified refinery base with a capacity of 3 million barrels per day in its 15 refineries across the U.S., Canada and the Caribbean. We note that the company is best positioned to profit from increased refining margins, mainly due to its strategic refinery structure that enables it to use cheaper oil for more than half of its needs.
The company’s price chart for the last three months shows significant strength. During the aforesaid period, Valero Energy gained almost 15% compared with only 9% improvement for the Zacks categorized Oil Refining & Marketing industry.
However, Valero Energy – the largest independent refiner in the country – remains exposed to the Brent-WTI spread, which was negative over a considerable portion of the fourth quarter. This may hurt the company’s margin
Moreover, improvement in crude prices following OPEC’s decision of production cut led to an increase in the input cost for refiners during the last month of the quarter.
Earnings Whispers
Our proven model does not conclusively show that Valero Energy is likely to beat earnings this quarter. That is because a stock needs to have both 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.
Zacks ESP: Valero Energy currently has an Earnings ESP of -5.20% as the Most Accurate Estimate of 73 cents is lower than the Zacks Consensus Estimate of 77 cents. 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, which increases the predictive power. However, the company’s negative Earnings ESP makes surprise prediction inconclusive.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Valero Energy Corporation Price and EPS Surprise
Valero Energy Corporation Price and EPS Surprise | Valero Energy Corporation Quote
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Enable Midstream Partners LP has an Earnings ESP of +11.77% and Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Summit Midstream Partners, L.P. (SMLP - Free Report) has an Earnings ESP of +76.47% and a Zacks Rank #3.
Plains All American Pipeline, L.P. (PAA - Free Report) has an Earnings ESP of +26.53% and a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>