Tesoro: Refining Its Way Higher

Shares of Tesoro (TSO) are surging today after the oil refiner reported solid profits thanks to wider profit margins.

Reuters

Tesoro reported a profit of $3.06 a share, easily topping forecasts for $2.15 a share, on revenue of $11.15 billion, below forecasts for $11.33 billion. Cowen’s Sam Margolin and Jason Gabelman explain how Tesoro beat the Street consensus:

The company’s refining segment outperformed in all regions with throughputs 60kbd higher than estimated and margins $3/bbl over the TSO Index, including $25/bbl in the Mid-con region. The retail segment posted a record quarter, beating our operating income estimates by $100MM on margins 100% higher than anticipated…

We expect the company’s 4Q results to benefit from continued Los Angeles synergy delivery and supportive Mid-Con gasoline margins throughout October in a typically weak demand season. We maintain our Outperform rating and raise our target to $90…

Shares of Tesoro have jumped 4.2% to $70.96 at 1:34 p.m. today, easily outpacing HollyFrontier’s (HFC) 0.4% rise, Valero Energy’s (VLO) 1.3% gain and Marathon Petroleum’s (MPC) 0.5% drop.