Yahoo Finance Why Valero’s Stock Fell 3.7% following Its Earnings Results
Valero Energy’s Stock Fell on Its 1Q16 Earnings Miss
Valero’s stock performance
Valero Energy (VLO) announced its results on May 3, 2016, before the market opened. The stock received a weak opening, likely due to the fact that its earnings missed analysts’ estimates.
VLO opened at $58 per share, lower than its previous close of $59.8. VLO saw highs of $59 and lows of $57 during the day. Eventually, VLO closed at $57.6, ~3.7% lower than its previous day’s close.
On May 3, 2016, VLO’s peers Alon USA Energy (ALJ), Western Refining (WNR), and Tesoro (TSO) fell by 5.8%, 8.6%, and 2.9%, respectively. For exposure to VLO, MPC, and PSX, you can consider the PowerShares Dynamic Large Cap Value ETF (PWV). PWV has ~11% exposure to energy sector stocks.
VLO’s 1Q16 capex position
Valero’s capex (capital expenditure) for the first quarter stood at $479 million. Valero expects its capex to be around $2.6 billion in 2016. Of this, $1 billion will be allocated to long-term earnings growth projects.
Growth capital is equally split between VLO’s logistics and refinery projects. Capex is aimed at increasing feedstock flexibility, yielding higher value products, sustaining growth, and improving logistics capabilities.
Valero completed its St. Charles gas oil hydrocarbon expansion in 1Q16, raising its capacity by 15,000 barrels per day (or bpd). The construction of a 90,000 bpd crude unit at its Houston refinery is progressing according to schedule, with start-up expected in 2Q16. Plus, the new crude unit at its Corpus Christi refinery, which came on-stream in 4Q15, contributed according to expectations in 1Q16.
Also in 1Q16, Valero entered into a dropdown transaction with Valero Energy Partners (VLP) consisting of McKee Terminal Services for $240 million.
According to Valero’s management, “VLP continues to deliver a distribution growth rate among the top of its peer group, which enhances its value to Valero stockholders. With a strong balance sheet and solid distribution coverage, VLP remains well positioned to deliver 25 percent annual distribution growth through 2017.”
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