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Why Is Marathon Petroleum (MPC) Up 6.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Marathon Petroleum (MPC). Shares have added about 6.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Marathon Petroleum due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Marathon Petroleum Posts Better-Than-Expected Q3 Earnings

Independent oil refiner and marketer Marathon Petroleum reported adjusted earnings per share of $7.81, which comfortably beat the Zacks Consensus Estimate of $6.80 and compared with a profit of merely 73 cents per share in the year-ago period.

The company’s bottom line was favorably impacted by the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $4.6 billion, ahead of its Zacks Consensus Estimate by 23.2%.

Marathon Petroleum reported revenues of $47.2 billion, which beat the Zacks Consensus Estimate of $35.7 billion and improved 44.8% year over year.

In October, the company completed its target to buy back $15 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business, comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven &i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion. Currently, MPC has remaining authorization of $5 billion with no expiration date.

Inside MPC’s Segments

Refining & Marketing: The Refining & Marketing segment reported an operating income of $4.6 billion, which soared from the year-ago profit of just $509 million. The jump primarily reflects higher year-over-year margins and throughputs.

Specifically, the refining margin of $30.21 per barrel improved significantly from $14.51 a year ago. Total refined product sales volumes were 3,587 thousand barrels per day (mbpd), up from 3,539 mbpd in the year-ago quarter. Throughput rose from 2,836 mbpd in the year-ago quarter to 3,007 mbpd and beat the Zacks Consensus Estimate of 2,932 mbpd. Capacity utilization during the quarter was up from last year’s 93% to 98%.

Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP — a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.

Segment profitability was $1.2 billion, 12.9% higher than in the third quarter of 2021. Earnings were supported by stable, fee-based revenues from MPLX’s wide range of midstream energy services.

Costs, Capex & Balance Sheet

Marathon Petroleum reported expenses of $40.6 billion in third-quarter 2022, rising 29.7% from the year-ago quarter.

In the reported quarter, Marathon Petroleum spent $789 million on capital programs (56% on Refining & Marketing and 34% on the Midstream segment) compared to $464 million in the year-ago period. As of Sep 30, the company had cash and cash equivalents of $7.4 billion and total debt, including that of MPLX, of $26.7 billion, with a debt-to-capitalization of 44.9%.





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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 29.07% due to these changes.

VGM Scores

Currently, Marathon Petroleum has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Marathon Petroleum has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Marathon Petroleum belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, Equinor (EQNR), has gained 4.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Equinor reported revenues of $43.63 billion in the last reported quarter, representing a year-over-year change of +87.6%. EPS of $2.12 for the same period compares with $0.85 a year ago.

Equinor is expected to post earnings of $1.71 per share for the current quarter, representing a year-over-year change of +25.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -30.6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Equinor. Also, the stock has a VGM Score of A.

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