Results: Valero Energy Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a good week for Valero Energy Corporation (NYSE:VLO) shareholders, because the company has just released its latest second-quarter results, and the shares gained 7.3% to US$159. The result was positive overall - although revenues of US$34b were in line with what the analysts predicted, Valero Energy surprised by delivering a statutory profit of US$2.71 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Valero Energy after the latest results.

See our latest analysis for Valero Energy

Taking into account the latest results, Valero Energy's 13 analysts currently expect revenues in 2024 to be US$134.8b, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 36% to US$11.77 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$135.1b and earnings per share (EPS) of US$13.35 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at US$172, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Valero Energy at US$197 per share, while the most bearish prices it at US$128. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Valero Energy shareholders.

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 Valero Energy's revenue growth is expected to slow, with the forecast 0.7% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 2.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Valero Energy.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Valero Energy's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$172, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Valero Energy analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Valero Energy (at least 1 which is significant) , and understanding these should be part of your investment process.

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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.

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