Will Valero Energy (VLO) maintain its streak of surprising financial results?

Looking for a stock that has consistently beaten earnings estimates and could be well-positioned to continue its streak into its next quarterly report? Valero Energy (VLO), which belongs to the Zacks Oil and Gas – Refining and Marketing industry, could be a great candidate to consider.

Looking at the last two reports, this oil refiner has had a strong streak of beating earnings estimates. The company has beaten estimates by 54.45%, on average, over the last two quarters.

Valero Energy was expected to post earnings of $1.03 per share for the last quarter but instead the company posted earnings of $2.12 per share, delivering a surprise of 105.83%. For the previous quarter, the consensus estimate was $1.95 per share when in reality the earnings were $2.01 per share, delivering a surprise of 3.08%.

Price and EPS are surprising

In the case of Valero Energy, estimates are higher, thanks in part to this earnings surprise history. And when you look at the stock’s positive Zacks Earnings ESP (Expected Surprise Prediction), it’s a great indicator of future earnings beats, especially when paired with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat consensus estimates could be as many as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a revision of the Zacks Consensus definition that is related to revision. The idea is that analysts revising their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other contributors to the consensus had previously predicted.

Valero Energy currently has an Earnings ESP of +1.28%, suggesting that analysts have recently become bullish on the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #3 (Hold), indicates that another beat is likely just around the corner. We expect the company’s next earnings report to be released on April 25, 2019.

When the Earnings ESP is negative, investors should remember that this will reduce the predictive power of the indicator. However, a negative value is not an indicator of a lack of earnings for the stock.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock growth. On the other hand, some stocks can maintain their position even if they end up missing consensus estimates.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.

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