Yahoo Finance Analyzing Valero Energy’s 9M15 Earnings
Analyzing Valero Energy’s Strong 3Q15 Earnings Performance
Valero Energy’s 9M15 earnings
After analyzing Valero Energy’s (VLO) 3Q15 financial results, we will discuss its year-to-date revenues and earnings performance. Valero Energy’s year-to-date net income increased to $3.69 billion, compared to its $2.47 billion net income from the same period in 2014.
With respect to geography, the US Gulf Coast accounted for the majority of VLO’s total operating income (49% in 3Q15). Here, operating income increased 21% to ~$3 billion in 9M15 over 9M14. However, Valero’s North Atlantic and US West Cost operations witnessed the most significant operating income rise. Valero’s West Coast operating income surged more than thirty-fold to $719 million.
Valero Energy’s refining segment performance outlook
Valero Energy’s 9M15 net income margin also improved to 5.4% from 2.5% in 9M14. Segment-wise, Valero’s refining segment witnessed a 51% rise in operating income from 9M14–9M15. The Refining segment accounted for 97% of Valero’s 9M15 operating income. Stronger gasoline and other product margins primarily accounted for the Refining segment’s margin inflation.
Valero (VLO) expects to see continued demand for its products in 4Q15. During the 3Q15 conference call, Joseph W. Gorder, Valero’s president and CEO, observed, “We are seeing good seasonal demand for our products in the fourth quarter.”
On the other hand, operating income in Valero’s ethanol segment decreased 75%. The lower ethanol operating income was led by the lower gross margin per gallon of ethanol. A decline in ethanol prices primarily caused this margin contraction.
EBITDA
In 9M15, Tesoro Corporation’s (TSO) EBITDA (earnings before interest, tax, depreciation and amortization) increased 82% over 9M14. During the same period, Valero’s EBITDA increased 31%. Tesoro is Valero’s smaller peer, with a market capitalization of $13.4 billion versus Valero’s current market capitalization of $32.7 billion. Valero Energy comprises 0.2% of the iShares Core S&P 500 ETF (IVV).
In the next part, we will discuss the analysts’ recommendations on Valero Energy.
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