Estimated and actual performances
Valero Energy (VLO) posted its first-quarter earnings results on April 25. In the quarter, its revenue exceeded Wall Street analysts’ mean estimate by ~13%. Its adjusted EPS stood at $0.34, which surpassed analysts’ consensus EPS estimate of $0.23 by ~48%.
Valero’s first-quarter EPS were, however, 66% lower than its adjusted EPS in the first quarter of 2018.
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Valero’s first-quarter earnings review
Valero’s adjusted net income attributable to its shareholders fell from $431 million in the first quarter of 2018 to $141 million in the first quarter of 2019 due to a fall in its operating earnings.
Valero’s operating earnings fell across its business segments. Its refining, ethanol, and renewable diesel earnings fell 41% YoY, 93% YoY, and 75% YoY, respectively, in the first quarter. Its refining operating earnings fell to $479 million due to the fall in its refining margins. Its gross refining margin contracted $0.7 per barrel YoY to $8.0 per barrel in the first quarter. Narrower crude oil spreads and weaker gasoline cracks affected its margin.
Further, Valero’s RIN (renewable identification number) expenses fell in the first quarter due to lower RIN prices. Valero’s biofuel blending cost stood at $91 million in the quarter, ~$115 million lower than in the first quarter of 2018.
Peers’ expected performances
Valero’s peers HollyFrontier (HFC) and Phillips 66 (PSX) are expected to post 43% YoY and 63% YoY falls in their EPS, respectively, in the first quarter. Marathon Petroleum’s (MPC) EPS are expected to rise from $0.04 in the first quarter of 2018 to $0.08 in the first quarter of 2019.