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Marathon Petroleum (MPC) Down 5% Since Last Earnings Report: Can It Rebound?
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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 5% 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 its most recent earnings report in order to get a better handle on the important drivers.
Marathon Q3 Earnings Top Despite a Decline in Margins
Independent oil refiner and marketer Marathon Petroleum Corporation reported third-quarter adjusted earnings per share of $8.14, which comfortably beat the Zacks Consensus Estimate of $7.79 and came ahead of the year-ago adjusted profit of $7.81. The outperformance primarily reflects lower costs and expenses, which offset the effect of a drop in refining margin.
Marathon Petroleum reported revenues of $41.6 billion, which beat the Zacks Consensus Estimate of $35.3 billion but declined 12% year over year due to a dip in throughput and capacity utilization.
In an important development for investors, MPC’s board of directors declared a quarterly cash dividend of 82.50 cents per share to its common shareholders of record on Nov 16. The payout, which represents a 10% sequential increase, will be made on Dec 11.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3.8 billion, which fell 18.8% from the year-ago profit of $4.6 billion. The decline primarily reflects lower year-over-year margins and a decrease in capacity utilization.
Specifically, the refining margin of $26.16 per barrel declined from $30.21 a year ago and came below our estimate of $31.33. Capacity utilization during the quarter was 94%, down from 98% in the corresponding period of 2022. We expected the metric to be 94.2%.
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 3,596 thousand barrels per day (mbpd), up from 3,587 mbpd in the year-ago quarter and our estimate of 3,574.6 mbpd. However, throughput fell from 3,007 mbpd in the year-ago quarter to 2,959 mbpd but outperformed our estimate of 2,930 mbpd.
MPC’s operating costs per barrel dropped from $5.63 in the year-ago quarter to $5.14. The company managed to rein in expenses due to lower energy outgo. Our estimates factored in a slightly lower unit cost of $5.10.
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 $1.1 billion, down 3.4% from the third quarter of 2022. Earnings were adversely affected by lower natural gas liquids prices.
Financial Analysis
Marathon Petroleum reported expenses of $36.8 billion in third-quarter 2023, falling 9.2% from the year-ago quarter but surpassing our projection of $28.9 billion.
In the reported quarter, Marathon Petroleum spent $522 million on capital programs (49% on Refining & Marketing and 45% on the Midstream segment) compared to $789 million in the year-ago period. As of Sep 30, the company had cash and cash equivalents of $8.5 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.2%.
In the third quarter, MPC repurchased $2.8 billion of shares and a further $1 billion worth of shares in October. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $8.3 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?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -19.94% due to these changes.
VGM Scores
Currently, Marathon Petroleum has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 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.
Performance of an Industry Player
Marathon Petroleum is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, TotalEnergies SE Sponsored ADR (TTE - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended September 2023 more than a month ago.
TotalEnergies SE Sponsored ADR reported revenues of $59.02 billion in the last reported quarter, representing a year-over-year change of -14.5%. EPS of $2.63 for the same period compares with $3.83 a year ago.
TotalEnergies SE Sponsored ADR is expected to post earnings of $2.50 per share for the current quarter, representing a year-over-year change of -15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.8%.
TotalEnergies SE Sponsored ADR has a Zacks Rank #3 (Hold) 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) Down 5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Marathon Petroleum (MPC - Free Report) . Shares have lost about 5% 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 its most recent earnings report in order to get a better handle on the important drivers.
Marathon Q3 Earnings Top Despite a Decline in Margins
Independent oil refiner and marketer Marathon Petroleum Corporation reported third-quarter adjusted earnings per share of $8.14, which comfortably beat the Zacks Consensus Estimate of $7.79 and came ahead of the year-ago adjusted profit of $7.81. The outperformance primarily reflects lower costs and expenses, which offset the effect of a drop in refining margin.
Marathon Petroleum reported revenues of $41.6 billion, which beat the Zacks Consensus Estimate of $35.3 billion but declined 12% year over year due to a dip in throughput and capacity utilization.
In an important development for investors, MPC’s board of directors declared a quarterly cash dividend of 82.50 cents per share to its common shareholders of record on Nov 16. The payout, which represents a 10% sequential increase, will be made on Dec 11.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $3.8 billion, which fell 18.8% from the year-ago profit of $4.6 billion. The decline primarily reflects lower year-over-year margins and a decrease in capacity utilization.
Specifically, the refining margin of $26.16 per barrel declined from $30.21 a year ago and came below our estimate of $31.33. Capacity utilization during the quarter was 94%, down from 98% in the corresponding period of 2022. We expected the metric to be 94.2%.
Meanwhile, total refined product sales volumes were 3,596 thousand barrels per day (mbpd), up from 3,587 mbpd in the year-ago quarter and our estimate of 3,574.6 mbpd. However, throughput fell from 3,007 mbpd in the year-ago quarter to 2,959 mbpd but outperformed our estimate of 2,930 mbpd.
MPC’s operating costs per barrel dropped from $5.63 in the year-ago quarter to $5.14. The company managed to rein in expenses due to lower energy outgo. Our estimates factored in a slightly lower unit cost of $5.10.
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 $1.1 billion, down 3.4% from the third quarter of 2022. Earnings were adversely affected by lower natural gas liquids prices.
Financial Analysis
Marathon Petroleum reported expenses of $36.8 billion in third-quarter 2023, falling 9.2% from the year-ago quarter but surpassing our projection of $28.9 billion.
In the reported quarter, Marathon Petroleum spent $522 million on capital programs (49% on Refining & Marketing and 45% on the Midstream segment) compared to $789 million in the year-ago period. As of Sep 30, the company had cash and cash equivalents of $8.5 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 46.2%.
In the third quarter, MPC repurchased $2.8 billion of shares and a further $1 billion worth of shares in October. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $8.3 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -19.94% due to these changes.
VGM Scores
Currently, Marathon Petroleum has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 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.
Performance of an Industry Player
Marathon Petroleum is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, TotalEnergies SE Sponsored ADR (TTE - Free Report) , a stock from the same industry, has gained 1.2%. The company reported its results for the quarter ended September 2023 more than a month ago.
TotalEnergies SE Sponsored ADR reported revenues of $59.02 billion in the last reported quarter, representing a year-over-year change of -14.5%. EPS of $2.63 for the same period compares with $3.83 a year ago.
TotalEnergies SE Sponsored ADR is expected to post earnings of $2.50 per share for the current quarter, representing a year-over-year change of -15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.8%.
TotalEnergies SE Sponsored ADR has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.