Can Valero Energy Meet Wall Street’s Estimate in Q3 2018?



How Valero performed in the second quarter

Valero Energy (VLO) is expected to publish its Q3 2018 results on October 25. Before we look at the third-quarter estimates, let’s see how Valero performed in the second quarter and compare that to Wall Street analysts’ estimates.

In the second quarter, Valero’s revenue surpassed analysts’ consensus estimate by ~22%. It reported EPS of $1.96. However, after adjusting for special items, its adjusted EPS was $2.15, which is 8.77% higher than the estimated EPS of $1.98. It was also 75% higher than its Q2 2017 adjusted EPS. Its refining margins rose year-over-year in the second quarter.

Valero’s net income attributable to its shareholders rose from $548 million in Q2 2017 to $845 million in Q2 2018. Adjusting for special items, its adjusted earnings were $928 million. Operating income from the refining, VLP (or midstream), and ethanol segments rose in Q2 2018 compared to Q2 2017.

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Valero’s Q3 2018 estimates

Wall Street analysts estimate that Valero could post EPS of $2 in the third quarter of 2018. That’s 3% higher than its Q3 2017 adjusted EPS but 9% lower than its adjusted EPS in Q2 2018. Its revenues are estimated at $28.3 billion for the third quarter, which is 20% higher than the third quarter of 2017.

Valero’s refining crack indicators point to a likely fall in its refining margin year-over-year. However, the impact of a weaker refining margin on earnings could be partially offset by a fall in RIN (Renewable Identification Number) prices in the quarter. We’ll take a closer look at that in the next part of this series.

By comparison, Wall Street analysts expect Phillips 66’s (PSX) and HollyFrontier’s (HFC) EPS to rise 44% and 60%, respectively, year-over-year in the third quarter of 2018. Analysts expect Marathon Petroleum’s (MPC) and Delek US Holdings’ (DK) EPS to rise 3% and 175%, respectively, year-over-year that quarter.


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