How Tesoro Stock Performed in Anticipation of 1Q17 Earnings



Tesoro’s stock performance

Tesoro (TSO) announced its results on May 8, 2017, after the market closed. Let’s see how Tesoro stock performed that day in anticipation of the company’s earnings.

TSO opened on May 8, 2017, at $81.10 per share, which was higher than its previous close of $80.90. Tesoro saw a high of $82.10 and a low of $80.60 during the day and eventually closed at $81.90. That was about 1.2% higher than its previous day’s close but in line with its peers. It was likely because the market was expecting Tesoro to report better numbers for 1Q17. We looked at this in the previous parts of this series.

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In comparison, on May 8, 2017, natural gas prices fell 2.7%, but crude oil rose 0.50%. Stock prices for TSO’s peers Marathon Petroleum (MPC), Valero Energy (VLO), and Phillips 66 (PSX) rose 1.3%, 1.2%, and 0.40%, respectively, that same day. The broader market indicator, the SPDR S&P 500 ETF (SPY), closed almost flat on May 8. SPY has about a 6.0% exposure to energy sector stocks, including TSO, VLO, MPC, and PSX.

Smaller refiners such as Delek US Holdings (DK), HollyFrontier (HFC), and Western Refining (WNR) rose 2.7%, 2.4%, and 1.1%, respectively, on May 8. For exposure to mid-cap stocks, you can consider the SPDR S&P MidCap 400 ETF (MDY) (MID-INDEX). MDY has a ~3.0% exposure to energy sector stocks, including HFC and WNR.

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Tesoro’s 1Q17 update

In 1Q17, Tesoro’s capex (capital expenditures) was $226.0 million, of which $45.0 million was attributed to Tesoro Logistics (TLLP). Tesoro aims to strengthen TLLP, its midstream MLP, through organic (optimal capex) as well as inorganic (drop-downs, acquisitions) paths. Tesoro expects to incur capex of $1.1 billion in 2017, of which about $325.0 million is slated for TLLP.

Tesoro’s ongoing acquisition of Western Refining (WNR) is progressing on schedule and is expected to close in 2Q17. TSO expects about $350.0 million–$425.0 million of annual saving in the form of operational synergies after the completion of the acquisition.

Tesoro’s chair and CEO (chief executive officer) Greg Goff said, “We are excited about the transformation of Tesoro through our pending acquisition of Western Refining and the value creation as a result of synergies. We expect to close the transaction soon and look forward to sharing additional information regarding synergies and integration plans.”


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