Analysts Are Updating Their Valero Energy Corporation (NYSE:VLO) Estimates After Its Annual Results

It's been a good week for Valero Energy Corporation (NYSE:VLO) shareholders, because the company has just released its latest full-year results, and the shares gained 7.6% to US$138. Valero Energy reported US$145b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$24.92 beat expectations, being 3.2% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Valero Energy

Following the recent earnings report, the consensus from 15 analysts covering Valero Energy is for revenues of US$132.5b in 2024. This implies an uneasy 8.4% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to plunge 44% to US$14.45 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$137.4b and earnings per share (EPS) of US$14.94 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$149 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Valero Energy analyst has a price target of US$175 per share, while the most pessimistic values it at US$126. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 8.4% annualised decline to the end of 2024. That is a notable change from historical growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.08% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Valero Energy is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$149, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Valero Energy analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Valero Energy that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.