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Tickers in this Article: VLO
Valero Energy (NYSE:VLO) will announce its third quarter earnings on Tuesday, October 30, 2012. Analysts have become increasingly bullish on the company in the last month, with consensus earnings per share estimate moving up from $1.61 a share to the current expectation of earnings of $1.73 a share.

A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: The figure has risen from $1.43 over the past three months. Analysts are expecting earnings of $4.55 per share for the fiscal year.

Revenue is expected to exceed last year's figure of $33.71 billion by 0.7% and come in at $33.94 billion for the quarter. Revenue of $136.19 billion is expected for the fiscal year.

Company Performance: Revenue increases have been in the double digits for the past four quarters. It has risen by an average of 45.6%, with the biggest increase of 86.4% coming in the fourth quarter of the last fiscal year.

Relative to the industry P/E ratio of 19.56, VLO's 9.7 is low. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Can Investors Trust the P/E Ratio?

Over the past quarter, the stock price has risen to $28.41 from $26.10 on July 27, 2012. Valero's best recent streak was when its price gained $4.19 per share between August 15, 2012 and September 13, 2012.

The Competition: Valero Energy is an independent refining and marketing company, which owns and operates refineries in the United States and Canada. Ten of 15 analysts give Valero a buy rating. Opinion about the stock has worsened recently, as buy ratings have dropped slightly over the last three months.

The company's closest competitor in the oil and gas operations industry is Tesoro (TSO). Analysts are more optimistic about Valero than about Tesoro. Only seven out of 13 analysts rate the latter a buy.

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