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Marathon Petroleum (MPC) Up 5.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Marathon Petroleum (MPC - Free Report) . Shares have added about 5.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Marathon Q2 Earnings Top Despite a Plunge in Margins
Independent oil refiner and marketer Marathon Petroleum Corporation reported adjusted earnings per share of $5.32, which comfortably beat the Zacks Consensus Estimate of $4.55 on the back of lower costs and expenses.
However, the company’s bottom line fell from the year-ago adjusted profit of $10.61 due to weaker-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $2.3 billion, below our projection of $2.8 billion.
Marathon Petroleum reported revenues of $36.8 billion, which beat the Zacks Consensus Estimate of $31 billion but declined 32.1% year over year.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $2.3 billion, which plunged from the year-ago profit of $7.1 billion. The decline primarily reflects lower year-over-year margins and refined product sales to go with a decrease in capacity utilization.
Specifically, the refining margin of $22.10 per barrel compared to $37.54 a year ago though it came ahead of our estimate of $17.98. Capacity utilization during the quarter was 93%, down from 100% in the corresponding period of 2022. We expected the metric to be 91.3%. The year-over-year tick-down reflects planned maintenance activity in the Mid-Continent and West Coast regions.
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 3,581 thousand barrels per day (mbpd), down from 3,615 mbpd in the year-ago quarter and our estimate of 3,630.2 mbpd. Throughput also fell from 3,069 mbpd in the year-ago quarter to 2,925 mbpd but outperformed our estimate of 2,860 mbpd.
MPC’s operating costs per barrel edged down from $5.19 in the year-ago quarter to $5.15. The company managed to reign in expenses due to lower energy outgo and disciplined execution. Our estimates factored in a higher unit cost of $5.20.
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 6.7% from the second 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.
Financial Analysis
Financial Analysis
In the reported quarter, Marathon Petroleum spent $562 million on capital programs (43% on Refining & Marketing and 48% on the Midstream segment) compared to $577 million in the year-ago period. As of Jun 30, the company had cash and cash equivalents of $7.3 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.3%.
In the second quarter, MPC repurchased $3.1 billion of shares and a further $800 million worth of shares in July. The company currently has a remaining authorization of $6.3 billion.
In the reported quarter, Marathon Petroleum spent $562 million on capital programs (43% on Refining & Marketing and 48% on the Midstream segment) compared to $577 million in the year-ago period. As of Jun 30, the company had cash and cash equivalents of $7.3 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.3%.
In the second quarter, MPC repurchased $3.1 billion of shares and a further $800 million worth of shares in July. The company currently has a remaining authorization of $6.3 billion.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 28.11% due to these changes.
VGM Scores
Currently, Marathon Petroleum has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marathon Petroleum has a Zacks Rank #3 (Hold). We expect an in-line 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, TotalEnergies SE Sponsored ADR (TTE - Free Report) , has gained 8.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
TotalEnergies SE Sponsored ADR reported revenues of $56.27 billion in the last reported quarter, representing a year-over-year change of -24.8%. EPS of $1.99 for the same period compares with $3.75 a year ago.
For the current quarter, TotalEnergies SE Sponsored ADR is expected to post earnings of $2.48 per share, indicating a change of -35.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
TotalEnergies SE Sponsored ADR has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Marathon Petroleum (MPC) Up 5.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Marathon Petroleum (MPC - Free Report) . Shares have added about 5.4% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Marathon Q2 Earnings Top Despite a Plunge in Margins
Independent oil refiner and marketer Marathon Petroleum Corporation reported adjusted earnings per share of $5.32, which comfortably beat the Zacks Consensus Estimate of $4.55 on the back of lower costs and expenses.
However, the company’s bottom line fell from the year-ago adjusted profit of $10.61 due to weaker-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $2.3 billion, below our projection of $2.8 billion.
Marathon Petroleum reported revenues of $36.8 billion, which beat the Zacks Consensus Estimate of $31 billion but declined 32.1% year over year.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $2.3 billion, which plunged from the year-ago profit of $7.1 billion. The decline primarily reflects lower year-over-year margins and refined product sales to go with a decrease in capacity utilization.
Specifically, the refining margin of $22.10 per barrel compared to $37.54 a year ago though it came ahead of our estimate of $17.98. Capacity utilization during the quarter was 93%, down from 100% in the corresponding period of 2022. We expected the metric to be 91.3%. The year-over-year tick-down reflects planned maintenance activity in the Mid-Continent and West Coast regions.
Meanwhile, total refined product sales volumes were 3,581 thousand barrels per day (mbpd), down from 3,615 mbpd in the year-ago quarter and our estimate of 3,630.2 mbpd. Throughput also fell from 3,069 mbpd in the year-ago quarter to 2,925 mbpd but outperformed our estimate of 2,860 mbpd.
MPC’s operating costs per barrel edged down from $5.19 in the year-ago quarter to $5.15. The company managed to reign in expenses due to lower energy outgo and disciplined execution. Our estimates factored in a higher unit cost of $5.20.
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 6.7% from the second 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.
Financial Analysis
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 28.11% due to these changes.
VGM Scores
Currently, Marathon Petroleum has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marathon Petroleum has a Zacks Rank #3 (Hold). We expect an in-line 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, TotalEnergies SE Sponsored ADR (TTE - Free Report) , has gained 8.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
TotalEnergies SE Sponsored ADR reported revenues of $56.27 billion in the last reported quarter, representing a year-over-year change of -24.8%. EPS of $1.99 for the same period compares with $3.75 a year ago.
For the current quarter, TotalEnergies SE Sponsored ADR is expected to post earnings of $2.48 per share, indicating a change of -35.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
TotalEnergies SE Sponsored ADR has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.