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

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Valero's 3Q17 Earnings: Can You Expect an Outstanding Show? PART 1 OF 7

Valero’s 3Q17 Earnings: Wall Street’s Stellar Expectations

2Q17 performance versus expectations

Valero Energy (VLO) is expected to publish its 3Q17 results on October 26. Before we proceed with the 3Q17 estimates, let’s recap Valero’s 2Q17 performance versus estimates.

In 2Q17, VLO’s revenues beat Wall Street analysts’ consensus estimate by ~10.5%. Plus, VLO reported earnings per share or EPS of $1.23, around 12% higher than its estimated EPS of $1.10. Valero’s 2Q17 EPS was also 15% higher than its 2Q16 EPS.

Valero’s 3Q17 Earnings: Wall Street&#8217;s Stellar Expectations

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VLO’s adjusted net income rose from $503 million in 2Q16 to $548 million in 2Q17 due to an increase in its midstream segment’s operating earnings. Plus, its refining segment’s adjusted operating earnings rose, somewhat offset by a decline in adjusted operating earnings at its ethanol segment.

Valero’s 3Q17 estimates

Wall Street analysts estimate that Valero Energy (VLO) could post EPS of $1.6 in 3Q17, 32% higher than its 2Q17 adjusted EPS and 31% higher than its adjusted EPS in 3Q16. However, VLO’s revenues are estimated to be around $18.9 billion in 3Q17, about 4% lower than its 3Q16 revenues.

In 3Q17, refining crack indicators in all the areas where Valero’s (VLO) refineries operate rose quarter-over-quarter and year-over-year. We discuss these changes in the next part of this series.

VLO’s peers are also expected to put on an exceptional show in 3Q17. Marathon Petroleum (MPC), Andeavor (ANDV), and Phillips 66 (PSX) are expected to post 126% YoY, 91% YoY, and 55% YoY rises in EPS in 3Q17. HollyFrontier’s (HFC) earnings are expected to be even higher in 3Q17. HFC’s 3Q17 estimated EPS is around 129% higher than its 3Q16 adjusted EPS. Also, Delek US Holdings (DK) and PBF Energy (PBF) are estimated to post positive EPS in 3Q17 compared to losses in 3Q16.


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