Valero Energy's Third Quarter Earnings Report

By Investopedia Staff | October 30, 2012 AAA

Valero Energy (NYSE:VLO) announced its results for the third quarter on October 30, 2012. Valero Energy is an independent refining and marketing company, which owns and operates refineries in the United States and Canada.

Investors care about earnings because they drive stock prices. Strong earnings generally result in the stock price moving up and vice versa. SEE: 5 Tricks Companies Use During Earnings Season

The Numbers: Valero Energy's latest numbers were good, as the company announced EPS and revenues that came in ahead predictions. The company reported adjusted net income of $1.90 per share versus the $1.75 per share estimate and revenues of $34.73 billion versus the $26.81 billion estimate. Revenue climbed 3% from the same period last year. Valero Energy's revenue has grown during each of the past four quarters on a year-over-year basis. The company's net income for the quarter was $674 million. According to the reported number, this is down 44% from last year's figures.

Management Quote: "Even with lower margins than last year, we reported solid financial results," said Valero Chairman and CEO Bill Klesse. "During the third quarter, we elected to reorganize the Aruba refinery into a crude oil and refined products terminal, did major-reliability work at the Meraux refinery, and continued to pursue the separation of our retail business. The new Port Arthur hydrocracker is expected to be operational in December, and the new St. Charles hydrocracker remains on schedule to be operational in the second quarter of 2013."

Looking Ahead: Analysts appear increasingly optimistic about the company's results for the next quarter. The average estimate for the fourth quarter has moved up from 56 cents a share to $1 over the last 90 days. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. Over the past three months, the average estimate for the fiscal year has climbed from $3.70 per to share to $4.45.

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