Growth Investors: Industry Analysts Just Upgraded Their Valero Energy Corporation (NYSE:VLO) Revenue Forecasts By 10%

Shareholders in Valero Energy Corporation (NYSE:VLO) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Valero Energy will make substantially more sales than they'd previously expected.

Following the upgrade, the current consensus from Valero Energy's 13 analysts is for revenues of US$123b in 2022 which - if met - would reflect a huge 38% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$6.77 per share this year. Previously, the analysts had been modelling revenues of US$112b and earnings per share (EPS) of US$6.35 in 2022. The most recent forecasts are noticeably more optimistic, with a nice increase in revenue estimates and a lift to earnings per share as well.

View our latest analysis for Valero Energy

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$93.50, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. There are some variant perceptions on Valero Energy, with the most bullish analyst valuing it at US$106 and the most bearish at US$75.00 per share. This shows there is still some 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Valero Energy is forecast to grow faster in the future than it has in the past, with revenues expected to display 38% annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.2% annually. Not only are Valero Energy's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Valero Energy.

Still, 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 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.