Here are some highlights from last week's earnings coverage from BloggingStocks:

• Alcatel-Lucent (NYSE: ALU) reported a surprise profit but is expected to return to losses next quarter.
• Coach Inc. (NYSE: COH) profit and revenue were in line with expectations, sending shares lower.
• Corning Inc. (NYSE: GLW) posted better-than-expected earnings but other concerns drove down shares.
• eHealth Inc. (NASDAQ: EHTH) reported solid Q2 numbers but Wall Street was not impressed.
• Goodyear Tire & Rubber Co. (NYSE: GT) posted a smaller-than-expected Q2 loss, sending shares higher.
• JAKKS Pacific Inc. (NASDAQ: JAKK) reported swinging to a Q2 net loss and revenues were flat.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Aetna Inc. (NYSE: AET) lowered its 2009 earnings guidance, initially sending the share price lower.
• Ciena Corp. (NASDAQ: CIEN) reported a bigger-than-expected Q2 net loss as revenues sank.
• Collective Brands Inc. (NYSE: PSS) saw Q1 earnings and sales decline, but beat Wall Street estimates.
• Google Inc. (NASDAQ: GOOG) earnings prospects led Goldman Sachs analysts to increase its forecasts.
• Guess? Inc. (NYSE: GES) weak Q1 results topped estimates and it offered guidance that pleased investors.

Readers of this space know that one of the preferred sectors has been the refining sector, with exclusions made for a few companies. Would that the United States (and much of the world, for that matter), transition to a next-generation propulsion system (natural gas, electric, fuel cell) quickly, but unfortunately that goal still looks a decade away, perhaps more. And that means refiners like Valero Energy (NYSE: VLO) will remain a force.

The market punished Valero in 2008 after refining margins narrowed substantially, but folks, we're talking gasoline in the United States here: gasoline refining margins can't (and didn't) contract for very long, and significant, additional margin improvement in seen in 2009.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• American Express Co. (NYSE: AXP) earnings tumbled in Q4 but came in just short of expectations.
• Best Buy Inc. (NYSE: BBY) earnings prospects and cash flow led to an analyst's upgrade.
• Bristol-Myers Squibb Co. (NYSE: BMY) topped analysts Q4 expectations, sending shares higher.
• Colgate-Palmolive Co. (NYSE: CL) posted a better-than-expected Q4 profit despite the weak economy.
• Delta Air Lines Inc. (NYSE: DAL) reported a big quarterly loss due to merger costs and bad fuel hedges.
• Eaton Corp. (NYSE: ETN) Q4 earnings fell on lower exchange rates and charges related to an acquisition.
• E*Trade Financial Corp. (NASDAQ: ETFC) narrowed its Q4 net loss but fell short of expectations.

Valero Energy (NYSE: VLO - option chain) shares have moved higher today after the company announced it will reduce its refining capacity to at least 20 percent below normal levels due to the weakening gasoline market. This move should save VLO some money and possibly help to stabilize the price of gasoline by reducing supply. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on VLO.

VLO opened this morning at $20.89. So far today the stock has hit a low of $20.58 and a high of $21.49. As of 12:00, VLO is trading at $21.13, up 30 cents (1.4%). The chart for VLO looks bullish and S&P gives VLO a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just three months as long as VLO is above $10 at March expiration. Valero would have to fall by more than 52% before we would start to lose money. Learn more about this type of trade here.

VLO hasn't been below $13 at all in the past year and has shown support around $16 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in VLO.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Alcatel-Lucent (NYSE: ALU) reported a narrower Q3 net loss and reaffirmed its outlook.
• Barclays (NYSE: BCS) earnings and dividend prospects resulted in an analyst's downgrade.
• Burger King Holdings Inc. (NYSE: BKC) posted its 19th straight quarter of positive growth.
• Choice Hotels International Inc. (NYSE: CHH) better-than-expected Q3 report led to an upgrade.
• Comcast Corp. (NASDAQ: CMCSA) reported strong Q3 numbers and maintained its revenue outlook.
• DreamWorks Animation SKG Inc. (NYSE: DWA) better-than-expected Q3 results driven by Kung Fu Panda.
• Exxon Mobil Corp. (NYSE: XOM) reported another record profit in Q3 driven by record high fuel prices.
• Garmin Ltd. (NASDAQ: GRMN) reported a better-than-expected Q3 profit and offered guidance.
• Hercules Inc. (NYSE: HPC) posted lower Q3 earnings and anounced [regulatory] approval of its buyout.
• Janus Capital Group Inc. (NYSE: JNS) weaker-than-expected results led to an analyst's downgrade.
• Legg Mason Inc. (NYSE: LM) swung to a smaller-than-expected Q2 net loss and shares soared.
• Motorola Inc. (NYSE: MOT) dismal Q3 results managed to beat low earnings expectations.
• Office Depot (NYSE: ODP) Q3 results included lower revenue and a net loss due to economic conditions.
• Qwest Communications International Inc. (NYSE: Q) unimpressive Q3 numbers fell short of estimates.
• Sun Microsystems (NASDAQ: JAVA) swung to a greater-than-expected net loss due in part to competition.
• Texas Roadhouse Inc. (NASDAQ: TXRH) missed Q3 estimates and warned of flat full-year earnings.
• Valero Energy Corp. (NYSE: VLO) strong Q3 results included a gain from a sale of a refinery.
• Visa Inc. (NYSE: V) beat Q4 earnings expectations after adjustment for litigation-related charges.
• Whirlpool Corp. (NYSE: WHR) fell short of revenue estimates and announced job cuts.

When I suggested In December 2006 that Valero Energy (NYSE: VLO) would be a smashing investment in 2007, I looked great as it rose from around $50 to almost $80 per share. When I stuck with it, recommending it for 2008, I got sandbagged big time as it sank from a 52-week high of $73.68 to a recent low of $14.59.

Valero was trapped by rapidly rising crude prices and shrinking margins on the refined product. However, in the last quarter it was able to show a year-over-year increase in profits.

VLO reported third quarter 2008 income from continuing operations of $1.2 billion, or $2.18 per share, which compares to $848 million, or $1.34 per share, in the third quarter of 2007. The third quarter 2008 results include the company's pre-tax gain of $305 million on the sale of its Krotz Springs, Louisiana refinery to a subsidiary of Alon USA Energy, Inc., which was effective July 1, 2008. Excluding this gain, third quarter 2008 income from continuing operations was $982 million, or $1.86 per share.

This morning the company said it planned significant turnarounds in 2009, with projects planned at two of its Texas refineries. The company also said it had scaled back capital spending in 2008 and 2009 by deferring projects until 2010 and 2011. "As it turns out, 2009 should be a more significant year for turnaround activity," said Chief Operating Officer Rich Marcogliese.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

Anglogold (NYSE: AU) closed at $27.47 Thursday. Gold is recently down 3.11% to $789.20 according to Bloomberg. AU September option implied volatility of 51 is above its 26-week average of 43 according to Track Data, suggesting larger movement.

Valero Energy (NYSE: VLO) closed at $33.93 Thursday. Crude oil futures are recently down 1.64% to $113.37. VLO September option implied volatility of 53 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.

Southern Peru Copper (NYSE: PCU) closed at $24 Thursday. Copper is recently down 3.80% to 326 according to Bloomberg. PCU September option implied volatility of 53 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Archer Daniels (NYSE: ADM) closed at $26.62 Thursday. Corn futures are recently down 3.38% to 557.75, Soybean futures are down 2.59% to 1241 according to Track Data. ADM September option implied volatility of 44 is above its 26-week average of 40 according to Track Data, suggesting slightly larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Aetna Inc. (NYSE: AET) net income rose on membership growth and a hike in premium rates.
• Altria Group Inc. (NYSE: MO) beat Q2 estimates, excluding charges related to its international cigarette unit.
• Arcelor Mittal (NYSE: MT) Q2 profit doubled on higher prices and it offered upbeat guidance.
• Comcast Corp. (NASDAQ: CMCSA) Q2 net income rose on higher rates but missed expectations.
• Corning Inc. (NYSE: GLW) earnings were in line with expectations, but revenue fell short.
• Exxon Mobil Corp. (NYSE: XOM) posted another record quarterly profit but Wall Street was looking for more.
• Garmin Ltd. (NASDAQ: GRMN) missed Q2 revenue estimates as fuel prices depressed growth.
• IAC/InterActive Corp. (NASDAQ: IACI) swung to a Q2 loss on a one time charge, but revenue rose.
• Kraft Foods Inc. (NYSE: KFT) beat Q2 earnings expectations on price hikes, and raised its guidance.
• McAfee Inc. (NYSE: MFE) reported healthy Q2 results and announced an acquisition.
• MetLife Inc. (NYSE: MET) missed earnings expectations and lowered its full-year guidance.
• Nucor Corp. (NYSE: NUE) reported record Q2 results and forecast a strong next quarter.
• Ryanair Holdings (NASDAQ: RYAAY) said Q1 profit tumbled on rising fuel prices and recession fears.
• Sirius Satellite Radio Inc. (NASDAQ: SIRI) said it expects a narrower Q2 loss ahead of the merger.
• Starbucks Corp. (NASDAQ: SBUX) swung to a Q3 loss on charges related to store closings.
• Valero Energy Corp. (NYSE: VLO) Q2 earnings fell 67% but still beat Wall Street estimates.
• Viacom Inc. (NYSE: VIA) posted better-than-expected earnings driven by Iron Man and Indiana Jones.

For more highlights from this week, see: General Motors, Motorola, Disney, Sony, Visa, CBS and others

Upcoming quarterly reports include Archer Daniels Midland (NYSE: ADM), Procter & Gamble (NYSE: PG), Jack-in-the-Box (NYSE: JBX), Cisco (NASDAQ: CSCO), News Corp. (NYSE: NWS), Whole Foods (NASDAQ: WFMI), Sprint Nextel (NYSE: S), Time Warner (NYSE: TWX), Freddie Mac (NYSE: FRE), and Blockbuster (NYSE: BBI).

Visit AOL Money & Finance for more earnings coverage.

Reuters reports that Valero Energy (NYSE: VLO), the biggest publicly-owned oil refiner in the U.S., suffered a 67% decline in net income. Its bad news was that the price of its input -- crude oil -- doubled to an average $125 a barrel in the second quarter, while its product, gasoline, increased a mere 25% in price.

There is good news here for investors. Analysts expected it to earn $1.35 per share, but Valero beat estimates by two cents. Not only that but its revenues rose 51%. Reuters quotes Valero's CEO who expects gasoline margins to be weak and industry-wide refinery utilization rates to drop through the end of 2009. In simple terms, refineries have the ability to produce more gasoline than people in the U.S. want to consume.

The stronger part of Valero's business is what it calls distillates -- diesel fuel, jet fuel and heating oil -- which seem to have much more stable demand in the face of rising prices. That stronger demand translates into higher utilization rates and higher profit margins through 2009. If that demand starts to fall off, however, Valero could be in even more trouble.

Its stock is down 55% for the year but is up 3% in premarket -- I am guessing based on the better than expected earnings results.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Valero securities.

A few days ago I posted Chasing Value: Valero -- when is a downgrade an upgrade? and since then I have become even more disturbed with our government and the stock analysts, as well as the companies they represent. Eitan Bernstein, an analyst with Friedman, Billings, Ramsey & Co downgraded his expectations for the major oil refiners Wednesday and lowered his price target for Valero Energy (NYSE: VLO) from $77 to $65.

How can this be? The stock was trading around $40 per share and closed Friday at $39.96. As a shareholder who has watched this stock go down, any signs of optimism have to be welcome I suppose, but what in the world is this guy saying. He is saying he has concerns about the sector, but believes VLO will be 61.5% higher this time next year any way!

This makes no sense. He can't be too concerned, can he? If you believed him you would buy all the VLO shares you could get hold of -- and so would he! Maybe he did? Or maybe he is trying to pump up the stock to help a big client? Or maybe he is clueless and does not know what he is talking about? What might his e-mails reveal?

Anyone can predict anything, and they have a right to be an idiot, but what responsibility does he have to eat his own cooking? VLO started the year near a high that is between Bernstein's old and new projections, and I for one have hopes of it rebounding, but I do not have the level of certainty to broadcast such an exact figure. What is the purpose?

The change in his projections of 15.5% is indicative of the silliness of this analysis. We have seen this before and will see it again ... so buyer beware.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of VLO.

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After five months of tracking my 2008 picks, it is rewarding to finally have a breakthrough -- topping the three major stock indices and Berkshire Hathaway (NYSE: BRK.B) too. It has been painful to have to report each month that I was being bested. However, since I have not seen anything contradicting my original rationale for my eight picks I stood my ground.

This past month saw great improvement. For the first time since I posted the original story Chasing Value: Final list -- 8 stocks for 2008, five of the eight stocks are up:

Moving into positive territory by pennies was Loews Corporation (NYSE: LTR). Among its holdings is a 51% stake in Diamond Offshore Drilling, Inc. (NYSE: DO) that has been doing well as the world remains desperate for more oil and natural gas.

Bunge Limited (NYSE: BG) was the other stock to cross the line into the black, while Valero Energy Corp. (NYSE: VLO), although improving, remains my worst performer. It is still down almost 28% after five months.

The gap between the Dow Jones Industrial Average, Standard & Poor's 500 Index and the technology heavy NASDAQ Composite Index narrowed substantially so that the three are tracking each other very closely. Stocks like Apple, Inc (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) continue to gain significantly and their outlooks have not been shaken amid overall pessimistic economic forecasts.

Reuters reports that ExxonMobil (NYSE: XOM) CEO Rex Tillerson went on The Today Show this morning to discuss the price of gasoline. Why? I think it's because he wants to diffuse political pressure to raise taxes on oil companies. Tillerson said that the price of gas is so high that people are using less of it.

But the subtext, in my opinion, was to put a face on the industry in the mind of the public so that it would be harder for politicians to harness public anger into higher taxes. Some big oil companies now have "too much" money coming in, with oil prices as high as they are. One of them has recently been in low-level debates with investors over what to do with all their cash as in "they can't spend it fast enough," an irony when gas prices are so high.

But as I posted yesterday, not all oil companies think that they have too much money coming in. Many such as Exxon and Valero Energy (NYSE: VLO) have reported disappointing earnings in the first quarter because the price of a barrel of oil has doubled while the wholesale price of gasoline has risen only 39%.

Valero Energy (NYSE: VLO) shares are trading higher along with most other refiners, as crude oil futures have dropped off from last week's record highs, which could start to help out refiner's margins. Also moving VLO is news that a large California refinery is coming back on line with no significant loss of production after a power outage yesterday morning. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on VLO.

After hitting a one-year high of $78.68 in July, the stock hit a one-year low of $44.55 last week. VLO opened this morning at $45.06. So far today the stock has hit a low of $45.01 and a high of $46.93. As of 12:45, VLO is trading at $46.86, up $2.30 (5.2%). The chart for VLO looks neutral and improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just six weeks as long as VLO is above $40 at June expiration. Valero would have to fall by more than 14% before we would start to lose money.

VLO hasn't been below $40 at all in the past year and has shown support around $45 recently. This trade could be risky if the price of gasoline falls off if demand starts to lower, but even though there is a slowdown in the US, other global economies are still clamoring for energy, which could keep prices high.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in VLO.