It has been about a month since the last earnings report for Marathon Petroleum (MPC - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marathon Petroleum due for a breakout? 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 Q1 Earnings Top on Margin Gains, Buyback Raised
Independent oil refiner and marketer, Marathon Petroleum Corporation reported adjusted earnings per share of $6.09, which comfortably beat the Zacks Consensus Estimate of $5.74 and compared with a profit of merely $1.49 per share in the year-ago period.
The company’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3 billion, ahead of its Zacks Consensus Estimate by 19.9%.
In October 2022, the company completed its target of buying 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 & Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion.
In the first quarter, MPC repurchased $3.2 billion of shares and a further $1.2 billion worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $9 billion.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3 billion, which soared from the year-ago profit of just $768 million. The jump primarily reflects higher year-over-year margins and refined product sales that more than offset lower capacity utilization.
Specifically, the refining margin of $26.15 per barrel improved significantly from $15.31 a year ago. Capacity utilization during the quarter was 89% compared to 91% in the corresponding period of 2022. The tickdown reflects planned maintenance activity in the Gulf Coast region.
The Refining & Marketing segment reported an operating income of $3 billion, which soared from the year-ago profit of just $768 million. The jump primarily reflects higher year-over-year margins and refined product sales that more than offset lower capacity utilization.
Meanwhile, total refined product sales volumes were 3,352 thousand barrels per day (mbpd), up from 3,293 mbpd in the year-ago quarter. Throughput also edged up from 2,833 mbpd in the year-ago quarter to 2,837 mbpd but missed the Zacks Consensus Estimate of 2,851 mbpd.
Further, operating costs per barrel increased 8.8% year over year to $5.68. The cost escalation was blamed on turnaround-related outgo.
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, up 13.2% from the first quarter of 2022. Earnings were supported by higher tariff rates and the stable, fee-based revenues from MPLX’s wide range of midstream energy services.
Segment profitability was $1.2 billion, up 13.2% from the first quarter of 2022. Earnings were supported by higher tariff rates and the stable, fee-based revenues from MPLX’s wide range of midstream energy services.
Costs, Capex & Balance Sheet
In the reported quarter, Marathon Petroleum spent $690 million on capital programs (61% on Refining & Marketing and 35% on the Midstream segment) compared to $573 million in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $8 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 45.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -24.01% due to these changes.
VGM Scores
At this time, Marathon Petroleum has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Petroleum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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It has been about a month since the last earnings report for Marathon Petroleum (MPC - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marathon Petroleum due for a breakout? 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 Q1 Earnings Top on Margin Gains, Buyback Raised
Independent oil refiner and marketer, Marathon Petroleum Corporation reported adjusted earnings per share of $6.09, which comfortably beat the Zacks Consensus Estimate of $5.74 and compared with a profit of merely $1.49 per share in the year-ago period.
The company’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3 billion, ahead of its Zacks Consensus Estimate by 19.9%.
In October 2022, the company completed its target of buying 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 & Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion.
In the first quarter, MPC repurchased $3.2 billion of shares and a further $1.2 billion worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $9 billion.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3 billion, which soared from the year-ago profit of just $768 million. The jump primarily reflects higher year-over-year margins and refined product sales that more than offset lower capacity utilization.
Specifically, the refining margin of $26.15 per barrel improved significantly from $15.31 a year ago. Capacity utilization during the quarter was 89% compared to 91% in the corresponding period of 2022. The tickdown reflects planned maintenance activity in the Gulf Coast region.
Meanwhile, total refined product sales volumes were 3,352 thousand barrels per day (mbpd), up from 3,293 mbpd in the year-ago quarter. Throughput also edged up from 2,833 mbpd in the year-ago quarter to 2,837 mbpd but missed the Zacks Consensus Estimate of 2,851 mbpd.
Further, operating costs per barrel increased 8.8% year over year to $5.68. The cost escalation was blamed on turnaround-related outgo.
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, up 13.2% from the first quarter of 2022. Earnings were supported by higher tariff rates and the stable, fee-based revenues from MPLX’s wide range of midstream energy services.
Costs, Capex & Balance Sheet
In the reported quarter, Marathon Petroleum spent $690 million on capital programs (61% on Refining & Marketing and 35% on the Midstream segment) compared to $573 million in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $8 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 45.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -24.01% due to these changes.
VGM Scores
At this time, Marathon Petroleum has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Petroleum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Top 5 Dividend Stocks for Your Retirement
Zacks targets 5 well-established companies with solid fundamentals and a history of raising dividends. More importantly, they have the resources and will to likely pay them in the future.
Click now for a Special Report packed with unconventional wisdom and insights you simply won’t get from your neighborhood financial planner.
See our Top 5 now – the report is FREE >>
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