Investors in Valero Energy Corporation (NYSE:VLO) had a good week, as its shares rose 7.6% to close at US$138 following the release of its yearly results. Valero Energy reported US$145b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$24.92 beat expectations, being 3.2% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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.
Check out our latest analysis for Valero Energy
Following the recent earnings report, the consensus from 15 analysts covering Valero Energy is for revenues of US$132.5b in 2024. This implies a chunky 8.4% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to nosedive 44% to US$14.45 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$137.4b and earnings per share (EPS) of US$14.94 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The analysts made no major changes to their price target of US$149, suggesting the downgrades are not expected to have a long-term impact on Valero Energy's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Valero Energy at US$175 per share, while the most bearish prices it at US$126. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 8.4% annualised decline to the end of 2024. That is a notable change from historical growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.08% per year. It's pretty clear that Valero Energy's revenues are expected to perform substantially worse than the wider industry.
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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Valero Energy going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Valero Energy you should know about.
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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.