Oil refining and marketing player, Valero Energy Corporation (VLO - Free Report) , posted adjusted second-quarter 2017 income of $1.23 per share that surpassed the Zacks Consensus Estimate of $1.08 and the year-ago adjusted profit of $1.08.
Total revenue for the quarter grew 13.6% year over year to $22,254 million from $19,584 million. The top line was also above the Zacks Consensus Estimate of $21,530 million.
Higher throughput margin due to 96% throughput capacity utilization supported Valero Energy’s strong second-quarter results.
During the quarter, refining throughput volumes were approximately 3.02 million barrels per day, up from 2.83 million barrels per day in the year-earlier level.
By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 43.3%, 16.8% and 17.1%, respectively. The remaining volumes came from residuals, other feedstock, blendstocks and others.
The Gulf Coast accounted for approximately 59% of the total throughput volume. The Mid-Continent, North Atlantic and West Coast regions contributed 16%, 16% and 9%, respectively.
Company-wide throughput margins increased to $8.66 per barrel from the year-ago level of $8.59 per barrel. Throughput capacity utilization of 96% during this quarter supported the outperformance.
Average throughput margin realized was $8.20 per barrel in the U.S. Gulf Coast as against $8.55 per barrel in the year-earlier period. The metric was $8.91 per barrel in the U.S. Mid-Continent as against $7.59 a year ago. Throughput margin realized was $9.39 per barrel in the North Atlantic compared with $7.39 last year and $9.93 per barrel in the U.S. West Coast compared with $12.67 in the prior-year quarter.
Total operating cost per barrel was $5.17 during the quarter, up 1.8% from the year-earlier figure of $5.08. Refining operating expense per barrel was $3.51 compared with $3.41 in the year-ago quarter. Depreciation and amortization expenses decreased marginally year over year to $1.66 per barrel from $1.67.
Capital Expenditure & Balance Sheet
Second-quarter capital expenditure was $461 million, including $63 million for turnarounds and catalyst expenditures. At the end of the quarter, the company had cash and temporary cash investments of $5.2 billion and debt of $8.5 billion. Valero Energy also rewarded shareholders with dividends and share buybacks worth $658 million.
Q2 Price Performance
During Apr–Jun 2017, Valero Energy’s shares have underperformed the industry. During the aforesaid period, the stock has gained 1.7% compared with 4.7% increase for the broader industry.
For 2017, Valero Energy reaffirmed its capital expenditure at $2.7 billion.
Zacks Rank & Key Picks
Currently, Valero carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Enbridge Energy, LP (EEP - Free Report) , Braskem S.A. (BAK - Free Report) and TransCanada Corp (TRP - Free Report) . While Braskem and TransCanada sport a Zacks Rank #1 (Strong Buy), Enbridge Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Enbridge Energy delivered a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the trailing four quarters with an average positive earnings surprise of 38.22%.
Braskem delivered a positive earnings surprise of 107.79% in the quarter ending September 2016.
TransCanada delivered a negative earnings surprise of 7.58% in the preceding quarter. It surpassed estimates in two of the trailing four quarters with an average positive earnings surprise of 1.06%.
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