Valero Energy: Do Analysts Expect Dull Numbers in Q1?



Performance versus the expectation

Valero Energy (VLO) is scheduled to publish its first-quarter results on April 25. Before we proceed with the first-quarter estimates, let’s recap the company’s performance in the fourth quarter of 2018 compared to analysts’ estimates.

In the fourth quarter, Valero Energy’s revenues beat analysts’ mean estimate by ~20%. The company’s adjusted EPS was $2.1, which beat analysts’ estimated EPS of $1.1 by ~98%. Valero Energy’s EPS rose 83% YoY in the fourth quarter.

Valero Energy’s operating earnings rose 54% YoY to $1.299 billion in the fourth quarter. The higher refining and midstream earnings were partially offset by lower ethanol earnings. The refining operating earnings rose 53% YoY to $1.481 billion.

First-quarter estimates

Analysts expect Valero Energy’s first-quarter earnings to be $0.42 per share. The estimate is 58% lower than the company’s adjusted EPS in the first quarter of 2018 and 80% lower than its adjusted EPS in the fourth quarter. Valero Energy’s revenues are estimated to be ~$21.9 billion in the first quarter, which is ~17% lower than its revenues in the first quarter of 2018.

Valero Energy’s refining crack indicators point towards a likely fall in the company’s refining margin year-over-year in the first quarter. However, the impact of the weaker refining margin on the company’s earnings could be partly offset by likely fall in the renewable identification number cost in the quarter.

Analysts expect Phillips 66 (PSX) and HollyFrontier’s (HFC) EPS to fall 24% YoY and 23% YoY in the first quarter, respectively. However, Marathon Petroleum’s (MPC) EPS could rise from $0.04 in the first quarter of 2018 to $0.40 in the first quarter. Delek US Holdings (DK) could post positive earnings in the first quarter compared to an adjusted loss in the first quarter of 2018.

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