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Valero Energy (VLO) Q3 Earnings & Revenues Beat, Rise Y/Y

Oil refining and marketing player Valero Energy Corporation VLO posted adjusted third-quarter 2017 income of $1.91 per share that surpassed the Zacks Consensus Estimate of $1.83 and the year-ago adjusted profit of $1.24.

Total revenues in the quarter grew 20.4% year over year to $23,562 million from $19,649 million. The top line also surpassed the Zacks Consensus Estimate of $20,183 million.

Higher throughput margin owing to 92% throughput capacity utilization supported Valero Energy’s strong third-quarter results.

Throughput Volumes

During the quarter, refining throughput volumes were nearly 3 million barrels a day, almost in line with the year-earlier level.

By feedstock composition, sweet crude, medium/light sour crude and heavy sour crude accounted for 52.4%, 16.3% and 17.3%, respectively. Residuals, other feedstock as well as blendstocks and others accounted for the remaining.

The Gulf Coast accounted for approximately 57% of the total throughput volume. The Mid-Continent, North Atlantic and West Coast regions contributed 16%, 17% and 10%, respectively.

Throughput Margins

Company-wide throughput margins increased to $10.94 per barrel from the year-ago level of $8.72. Throughput capacity utilization of 92% during this quarter supported the outperformance.

Average throughput margin realized was $9.76 per barrel in the U.S. Gulf Coast as against $8.60 in the year-earlier period. The metric was $13.31 per barrel in the U.S. Mid-Continent versus $8.85 a year ago. Throughput margin realized was $11.51 a barrel in the North Atlantic compared with $7.74 last year.

Refining operating expense per barrel was $3.71 compared with $3.54 in the year-ago quarter. Depreciation and amortization expenses increased year over year to $1.71 a barrel from $1.63.

Capital Expenditure & Balance Sheet

Third-quarter capital expenditure totaled $565 million, including $73 million for turnarounds and catalyst expenditure. At the end of the quarter under review, the company had cash and temporary cash investments of $5.2 billion and debt of $8.5 billion. Valero Energy also rewarded shareholders with dividends and share buybacks worth $600 million.

Q3 Price Performance

During the July-to-September quarter, Valero Energy gained 14% as compared with the industry’s10.5% rally.

Zacks Rank & Key Picks

Valero Energy currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Par Pacific Holdings Inc. PARR, Northern Oil and Gas, Inc. NOG and Canadian Natural Resources Ltd. CNQ. Par Pacific sports a Zacks Rank #1 (Strong Buy) while Northern Oil and Gas and Canadian Natural carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Headquartered in Houston, TX, Par Pacific managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average earnings surprise being 195.26%.

Based in Minnetonka, MN, Northern Oil and Gas is an upstream energy player. The company’s 2017 revenues are estimated to grow 44.1%.

Canadian Natural, headquartered in Calgary, Alberta, Canada, is primarily an upstream energy firm. The firm will likely witness year-over-year earnings growth of 234.8% in 2017.

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Valero Energy Corporation (VLO): Free Stock Analysis Report
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