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Marathon (MPC) Q1 Loss Narrower Than Expected, Sales Beat

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Independent oil refiner and marketer Marathon Petroleum Corporation (MPC - Free Report) reported adjusted loss of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 72 cents. The company’s bottom line was favourably impacted by cost savings and stronger-than-expected performance from the Midstream segment. Precisely, operating income from the unit totaled $972 million, ahead of the Zacks Consensus Estimates of $929 million.

However, the bottom line compared unfavorably the year-earlier quarter's loss of 16 cents due to sharply lower refining margins.

Marathon Petroleum reported revenues of $22.9 billion that beat the Zacks Consensus Estimate of $15.8 billion and improved 9% year over year.

In an important quarterly development, Marathon Petroleum obtained approval from the Board of Directors to convert its Martinez petroleum refinery into a renewable diesel facility in response to the collapsing product demand. Further, the company notified that it expects the $21 billion-sale of its Speedway business to Japanese retail group Seven & i Holdings to conclude shortly.

Marathon Petroleum Corporation Price, Consensus and EPS Surprise

Marathon Petroleum Corporation Price, Consensus and EPS Surprise

Marathon Petroleum Corporation price-consensus-eps-surprise-chart | Marathon Petroleum Corporation Quote

 

Y/Y Segmental Performance

Refining & Marketing: The Refining & Marketing segment reported operating loss of $598 million, wider than the year-ago loss of $497 million. The deterioration reflects lower y/y margins.

Specifically, refining margin of $10.16 per barrel decreased from $11.86 a year ago. Total refined product sales volumes were 3,067 thousand barrels per day (mbpd), down from the 3,588 mbpd in the year-ago quarter. Moreover, throughput fell from 2,994 mbpd in the year-ago quarter to 2,565 mbpd though it beat the Zacks Consensus Estimate of 2,509 mbpd. Capacity utilization during the quarter was down from last year’s 91% to 83%.

Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP (MPLX - Free Report) – a publicly traded master limited partnerships that own, operate, develop and acquire pipelines and other midstream assets.

Segment profitability was $972 million, 7.4% higher than the first quarter of 2020 and ahead of the Zacks Consensus Estimate of $929 million. Earnings were supported by stable, fee-based revenues and lower operating expenses.

Costs, Capex & Balance Sheet

Marathon Petroleum reported expenses of $22.7 billion in first-quarter 2021, down 31.6% from the year-ago quarter.

In the reported quarter, Marathon Petroleum spent $410 million on capital programs (33% on Refining & Marketing and 34% on the Midstream segment) compared to $1.1 billion in the year-ago period. As of Mar 31, the company had cash and cash equivalents of $758 million and a total debt, including that of MPLX, of $32.6 billion, with a debt-to-capitalization ratio of 53.4%.

Zacks Rank & Stock Picks

Marathon Petroleum carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Exxon Mobil Corporation (XOM - Free Report) and Suncor Energy (SU - Free Report) . Both the companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil has an expected earnings growth rate of 1,087.88% for the current year.  

Suncor Energy has an expected earnings growth rate of 223.64% for the current year.

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