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Earnings Estimates Rising for Valero Energy (VLO): Will It Gain?

Valero Energy (VLO) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

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This story originally appeared on Zacks

Valero Energy (VLO) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

- Zacks

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this oil refiner, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Valero Energy, as there has been strong agreement among the covering analysts in raising estimates.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $0.86 per share, which is a change of +181.13% from the year-ago reported number.

Over the last 30 days, two estimates have moved higher for Valero Energy compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 43%.

Current-Year Estimate Revisions

The company is expected to earn $0.55 per share for the full year, which represents a change of +117.63% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Valero Energy. Over the past month, four estimates have moved higher compared to one negative revision, helping the consensus estimate increase 207.78%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Valero Energy currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Valero Energy shares have added 19.8% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.



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