Valero Energy Corporation (VLO) is scheduled to report the third quarter results on Tuesday, October 27, 2009. In the previous quarter, the company disappointed investors with earnings losses. The story won't be different in this quarter as well.

Analysts' estimates for the quarter ending September 2009 (Q3) range from a low of $-0.49 to a high of $-0.18, with a consensus of $-0.325. For the fiscal quarter ending September 2009, the consensus EPS forecast has remained the same over the past week at -$0.325 and decreased over the past month from -$0.179 to -$0.325 (-81.56%). Of the 17 analysts making quarterly forecasts, 2 raised and 8 lowered their forecast. The decrease in earnings forecast over the past month is attributable to lower refining margins on diesel and jet fuel, and asset write-downs.

For the third quarter of 2009, the company said that refinery throughput volumes at Gulf Coast should average between 1.2 and 1.25 million barrels per day. Mid-Continent should average between 360,000 and 370,000 barrels per day. West Coast should average between 270,000 and 280,000 barrels per day. And the North East should average between 500,000 to 510,000 barrels per day. Refinery cash operating expenses are expected to be about $4.50 per barrel. Regarding ethanol operation in the third quarter, the company expects total throughput volumes of 2.2 million gallons per day and operating expenses should average approximately $0.30 per gallon, including $0.03 per gallon for non-cash costs such as depreciation and amortization.

The company has initiated several cost cutting measures to improve its margins. For instance, the company is saving nearly $12 million by outsourcing medical claims processing. The company targets nearly $200 million cost savings by the end of 2009.

With respect to some of the other items for the third quarter, I expect G&A expense including depreciation to be around $135 million. Net interest expense should be around $110 million. Total depreciation and amortization expense should be around $385 million and effective tax rate could be around 30%.

For the fiscal year ending December 2009, the consensus EPS forecast has increased over the past week from -$0.375 to -$0.352 (6.13%) and decreased over the past month from -$0.137 to -$0.352 (-156.93%). Of the 20 analysts making yearly forecasts, 2 raised and 10 lowered their forecast.

The company's stock closed Wednesday at $20.12, compared to the 52 week range of $13.94 and $26.2. I guess the stock is trading at appropriate levels.