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Valero's 3Q17 Earnings: Can You Expect an Outstanding Show?

PART:
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Part 5
Valero's 3Q17 Earnings: Can You Expect an Outstanding Show? PART 5 OF 7

Estimating Valero Stock Price ahead of Q3 Earnings

Implied volatility in Valero

In this part of our series, we’ll look at Valero Energy’s (VLO) stock price forecast range, which is based on its current implied volatility, for a 20-day period before its earnings. Valero Energy is expected to post its 3Q17 earnings on October 26.

Estimating Valero Stock Price ahead of Q3 Earnings

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Implied volatility in Valero has risen from 22.1% on July 3, 2017, to the current level of 22.8%. Valero’s stock price rose 14.5% in the same period.

Likely price range for Valero stock for the 20-day period ending October 26

Valero’s stock price range is estimated considering VLO’s implied volatility of 22.8%, assuming a normal distribution of prices (bell curve model), and a standard deviation of one (which suggests a probability of 68.2%). Valero’s stock price could close between $81.3 and $73.1 per share in the next 20 calendar days, ending on October 26.

Volatility and returns for VLO’s peers

Implied volatility in Delek US Holdings (DK) and HollyFrontier (HFC) rose 2.5% and 0.9%, respectively, since July 3. Currently, implied volatilities in DK and HFC stand at 39.3% and 34.9%, respectively. However, implied volatility in PBF Energy (PBF) fell 1.0% from July 3 to the current level of 36.8%. HFC and PBF’s stock prices rose 28.9% and 18.5%, respectively, in the period. But DK’s stock price fell 1.2% since July 3.

The SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF’s (SPY) have also recorded drops in their implied volatilities, by 2.8% and 1.4%, respectively, since July 3. DIA and SPY’s implied volatilities currently stand at 7.2%. During the same period, DIA and SPY witnessed a rise in their values by 6.7% and 5.2%, respectively.

Read on to the next part of this series to see where analyst ratings for Valero stand ahead of 3Q17 earnings.

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