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Is a Beat in Store for Marathon Petroleum's (MPC) Q3 Earnings?

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Marathon Petroleum Corporation (MPC - Free Report) is set to release third-quarter 2021 results on Tuesday Nov 2, before the opening bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s profit is 72 cents per share and for revenues is $17.12 billion.

Against this backdrop, let’s consider the factors that are likely to impact the company’s September-quarter results.

Factors to Consider for Q3 Results

Marathon Petroleum’s midstream unit, which mainly represents its general partner and majority limited partner interests in MPLX LP (MPLX - Free Report) , saw a profit of $977 million in the second quarter of 2021, reflecting a 12.4% increase from the year-ago quarter’s reported figure. Earnings were supported by stable, fee-based revenues, lower operating expenses and a contribution from organic growth projects, a trend that most likely continued in the third quarter of 2021 as well.

The Zacks Consensus Estimate for third-quarter Midstream segment’s profit is pegged at $984 million, hinting at an improvement of 2.5% from $960 million reported in the year-ago period.

Based on regional demand, the company projects total throughput volumes for the third quarter at 2.8 million barrels per day, which is in line with the sequential quarter’s reported figure.

The company’s Refining & Marketing segment reported an operating income of $224 million in the second quarter, rebounding from the year-ago loss of $1.5 billion. The improvement reflects higher year-over-year margins, a trend that most likely continued in the third quarter as well.

The Zacks Consensus Estimate for third-quarter Refining & Marketing segment’s profit is pegged at $484 million. The segment suffered a loss of $1.6 billion in the year-ago period.

Marathon Petroleum's third-quarter earnings are projected to be boosted by the expected rise in income from both segments.

What Does Our Model Say?

Our proven Zacks model predicts an earnings beat for Marathon Petroleum this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Marathon Petroleum has an Earnings ESP of +4.28%.

Zacks Rank: Marathon Petroleum currently has a Zacks Rank #3, which increases the predictive power of ESP.  

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

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, this Findlay, OH-based company reported adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate of 45 cents and came against a loss of $1.33 per share in the year-ago period. The company’s bottom line was favorably impacted by a stronger-than-expected performance from both its segments. Operating income from the Refining & Marketing and the Midstream units totaled $224 million and $977 million, respectively, ahead of their Zacks Consensus Estimate of $145 million and $949 million each.

Marathon Petroleum’s revenues of $29.8 billion beat the Zacks Consensus Estimate of $17.3 billion and improved 142.5% year over year.

As far as its earnings surprises are concerned, the company is on a strong footing. Its bottom line exceeded the Zacks Consensus Estimate in all the trailing four quarters, the average being 49.44%. This is depicted in the graph below:

Stocks to Consider

Some other firms worth considering from the  energy  space with the right combination of elements to beat on earnings this season are as follows:

Whiting Petroleum Corporation has an Earnings ESP of +5.63% and a Zacks Rank of 1, currently. The firm is scheduled to release earnings on Nov 4.

Targa Resources Corp. (TRGP - Free Report) has an Earnings ESP of +15.01% and is Zacks #1 Ranked at present. The firm is scheduled to release earnings on Nov 4.


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