Stock Analysis

What Are Analysts Expecting From Valero Energy Corporation (NYSE:VLO) Over The Next Year?

NYSE:VLO
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Since Valero Energy Corporation (NYSE:VLO) released its earnings in December 2017, analyst consensus outlook appear pessimistic, with profits predicted to drop by -21.07% next year compared with the past 5-year average growth rate of 7.81%. Currently with a profit of US$4.06B, the consensus growth rate suggests that earnings will drop to US$3.21B by 2019. Below is a brief commentary around Valero Energy's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here. Check out our latest analysis for Valero Energy

Exciting times ahead?

The view from 17 analysts over the next three years is one of negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of VLO's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
NYSE:VLO Future Profit Mar 14th 18
NYSE:VLO Future Profit Mar 14th 18
From the current net income level of US$4.06B and the final forecast of US$4.28B by 2021, the annual rate of growth for VLO’s earnings is -3.43%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $10.52 in the final year of forecast compared to the current $9.19 EPS today. The bottom-line decline seems to be caused by cost outpacing top line growth of 6.28% over the next few years. With this high cost growth, margins is expected to contract from 4.59% to 4.04% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Valero Energy, I've put together three important factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Valero Energy worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Valero Energy is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Valero Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

Valuation is complex, but we're helping make it simple.

Find out whether Valero Energy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.