Yahoo Finance Valero’s 1Q16 Estimates: Earnings Expected to Be under Pressure
1Q16 Pre-Earnings Analysis of Oil Refiner Valero Energy Corp.
4Q15 estimated and actual performance
Valero Energy (VLO) is expected to post its 1Q16 results on May 3, 2016. Before we proceed with the 1Q16 estimates, let’s recap Valero’s 4Q15 performance versus its estimates.
In 4Q15, VLO’s revenues surpassed Wall Street analysts’ estimates by 8.7%. In 4Q15, its adjusted EPS stood at $1.80, around 22% higher than the estimated EPS of $1.50. However, it was 2% lower than its 4Q14 adjusted EPS.
Valero Energy’s (VLO) refining margin contracted by $0.30 per barrel over 4Q14 to $10.90 per barrel in 4Q15. This was due to a fall in diesel cracks across its operating areas in the US.
At $862 million, VLO’s adjusted net income in 4Q15 fell by 9% compared to 4Q14. This was due to fall in the adjusted operating income of its Refining segment coupled with a steep fall in income in its Ethanol segment.
Valero’s 1Q16 estimates are expected to be lower
Analysts estimate that Valero Energy (VLO) could post an EPS of $0.67 in 1Q16. This is 64% lower than its adjusted EPS in 1Q15 and 62% lower than its 4Q15 adjusted EPS. VLO’s revenues are estimated to be around $16 billion in 1Q16, 25% lower than its 1Q15 revenues.
In 1Q16, refining earnings are likely to be under pressure. This is due to the fact that regional crack indicators for the four areas where Valero Energy’s (VLO) refineries operate have fallen. We will discuss this in more detail in the next part of the series.
Valero Energy’s (VLO) peer HollyFrontier (HFC) is expected to post 93% lower EPS in 1Q16 compared to 1Q15. On the other hand, Delek US Holdings (DK) and Alon USA Energy (ALJ) are expected to post losses in 1Q16.
The PowerShares Dynamic Large Cap Value ETF (PWV) has ~11% exposure to energy sector stocks.
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