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Why Is Marathon Petroleum (MPC) Up 6.6% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Marathon Petroleum Corporation (MPC - Free Report) . Shares have added about 6.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Results
Despite a challenging margin environment, Marathon Petroleum Corp. reported strong fourth-quarter earnings on the back of solid operational performance.
The company’s earnings per share came in at $0.43, higher than the Zacks Consensus Estimate of $0.25 and the year-ago income of $0.35.
Marathon Petroleum posted revenues of $17,284 million, ahead of the Zacks Consensus Estimate of $13,500 million and up 10% year-over-year.
Segmental Performance
Refining & Marketing: The unit profitability was $219 million compared with $179 million in the year-ago quarter. The improvement reflects higher crack spreads, partly offset by lower product price realizations and higher turnaround-associated operating costs. The unit’s gross margin fell 10% to $11.41 a barrel.
Total refined product sales volumes were 2,252 thousand barrels per day (mbpd), essentially flat from the 2,257 mbpd in the year-ago quarter. However, throughput deteriorated from 1,839 mbpd in the year-ago quarter to 1,810 mbpd. Capacity utilization, at 93%, was down from 95% in the fourth quarter of 2015.
Speedway: Income from the Speedway retail stations totaled $165 million, 22% higher than the $135 million earned in the year-ago period. Rise in merchandise margins in addition to lower operating costs, buoyed the results. To some extent, lower light product margin hampered the numbers.
Midstream: This unit includes Marathon Petroleum’s 100% interest in MPLX L.P., a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $245 million, up significantly from $94 million in the fourth quarter of 2015. Earnings were driven by operating results from the acquisition of natural gas processor and distributor MarkWest Energy Partners L.P. in late 2015. Contributions from new pipelines and marine equity investments provided further support.
Total Expenses
Marathon Petroleum reported expenses of $16,731 million in fourth-quarter 2016, 9% higher than $15,341 million in the year-ago quarter.
Capital Expenditure, Balance Sheet & Share Repurchase
In the reported quarter, Marathon Petroleum spent $837 million on capital programs (37% on Refining & Marketing segment and 45% on Midstream). As of Dec 31, 2016, the company had cash and cash equivalents of $887 million and total debt of $10,572 million, with a debt-to-capitalization ratio of 33%.
For this year, Marathon Petroleum has pledged to spend $1.7 billion on capital projects, excluding MPLX L.P.
Strategic Actions
Amid pressure from hedge fund Elliott Management to enhance shareholder value, Marathon Petroleum said that it would speed up the previously announced plan to dropdown certain assets to its midstream partnership MPLX L.P. The company added that a designated committee to review the separation of its Speedway retail unit – another demand from the activist investor that owns 4% of Marathon Petroleum stock – is expected to provide an update by mid-2017.
Further, the downstream operator announced a cutback in its investments in a project that aims to connect integrate its Galveston Bay and Texas City refineries, by $500 million to $1.5 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five downward revisions for the current quarter.
Marathon Petroleum Corporation Price and Consensus
At this time, Marathon Petroleum's stock has an average Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Marathon Petroleum (MPC) Up 6.6% Since the Last Earnings Report?
A month has gone by since the last earnings report for Marathon Petroleum Corporation (MPC - Free Report) . Shares have added about 6.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2016 Results
Despite a challenging margin environment, Marathon Petroleum Corp. reported strong fourth-quarter earnings on the back of solid operational performance.
The company’s earnings per share came in at $0.43, higher than the Zacks Consensus Estimate of $0.25 and the year-ago income of $0.35.
Marathon Petroleum posted revenues of $17,284 million, ahead of the Zacks Consensus Estimate of $13,500 million and up 10% year-over-year.
Segmental Performance
Refining & Marketing: The unit profitability was $219 million compared with $179 million in the year-ago quarter. The improvement reflects higher crack spreads, partly offset by lower product price realizations and higher turnaround-associated operating costs. The unit’s gross margin fell 10% to $11.41 a barrel.
Total refined product sales volumes were 2,252 thousand barrels per day (mbpd), essentially flat from the 2,257 mbpd in the year-ago quarter. However, throughput deteriorated from 1,839 mbpd in the year-ago quarter to 1,810 mbpd. Capacity utilization, at 93%, was down from 95% in the fourth quarter of 2015.
Speedway: Income from the Speedway retail stations totaled $165 million, 22% higher than the $135 million earned in the year-ago period. Rise in merchandise margins in addition to lower operating costs, buoyed the results. To some extent, lower light product margin hampered the numbers.
Midstream: This unit includes Marathon Petroleum’s 100% interest in MPLX L.P., a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $245 million, up significantly from $94 million in the fourth quarter of 2015. Earnings were driven by operating results from the acquisition of natural gas processor and distributor MarkWest Energy Partners L.P. in late 2015. Contributions from new pipelines and marine equity investments provided further support.
Total Expenses
Marathon Petroleum reported expenses of $16,731 million in fourth-quarter 2016, 9% higher than $15,341 million in the year-ago quarter.
Capital Expenditure, Balance Sheet & Share Repurchase
In the reported quarter, Marathon Petroleum spent $837 million on capital programs (37% on Refining & Marketing segment and 45% on Midstream). As of Dec 31, 2016, the company had cash and cash equivalents of $887 million and total debt of $10,572 million, with a debt-to-capitalization ratio of 33%.
For this year, Marathon Petroleum has pledged to spend $1.7 billion on capital projects, excluding MPLX L.P.
Strategic Actions
Amid pressure from hedge fund Elliott Management to enhance shareholder value, Marathon Petroleum said that it would speed up the previously announced plan to dropdown certain assets to its midstream partnership MPLX L.P. The company added that a designated committee to review the separation of its Speedway retail unit – another demand from the activist investor that owns 4% of Marathon Petroleum stock – is expected to provide an update by mid-2017.
Further, the downstream operator announced a cutback in its investments in a project that aims to connect integrate its Galveston Bay and Texas City refineries, by $500 million to $1.5 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five downward revisions for the current quarter.
Marathon Petroleum Corporation Price and Consensus
Marathon Petroleum Corporation Price and Consensus | Marathon Petroleum Corporation Quote
VGM Scores
At this time, Marathon Petroleum's stock has an average Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. 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 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.