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Marathon Petroleum (MPC) Up 3.5% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Marathon Petroleum Corporation (MPC - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
First-Quarter 2017 Results
Marathon Petroleum reported strong first-quarter earnings on higher gross margins and solid operational performance from its ‘Midstream’ unit.
The company’s earnings per share came in at $0.06, contrary to the Zacks Consensus Estimate for a loss of $0.01.
However, Marathon Petroleum’s revenues of $16,393 million missed the Zacks Consensus Estimate of $19,030.9 million amid lower throughput volumes, though they were up 28% year over year.
Segmental Performance
Refining & Marketing: Operating loss from the Refining & Marketing segment was $70 million compared with a loss of $86 million in the year-ago quarter. The narrower loss reflects higher gross margin, which rose 18% to $11.65 a barrel.
Total refined product sales volumes were 2,085 thousand barrels per day (mbpd), down 3% from the 2,158 mbpd in the year-ago quarter. Moreover, throughput deteriorated from 1,774 mbpd in the year-ago quarter to 1,708 mbpd. Capacity utilization, at 83%, was down from 89% in the first quarter of 2016.
Speedway: Income from the Speedway retail stations totaled $135 million, 19% lower than the $167 million earned in the year-ago period. Fall in merchandise margins hampered the results.
Midstream: This unit includes Marathon Petroleum’s 100% interest in MPLX L.P., a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $309 million, up significantly from $189 million in the first quarter of 2016. Earnings were buoyed by new pipeline and marine equity investments as well as increased processing and fractionation activity.
Total Expenses
Marathon Petroleum reported expenses of $16,101 million in first-quarter 2017, 26% higher than $12,755 million in the year-ago quarter.
Capital Expenditure, Balance Sheet & Share Repurchase
In the reported quarter, Marathon Petroleum spent $1,325 million on capital programs (81% on the Midstream segment). As of Mar 31, 2017, the company had cash and cash equivalents of $2,167 million and total debt of $12,598 million, with a debt-to-capitalization ratio of 38%.
During the quarter under review, Marathon Petroleum returned $610 million of capital to shareholders, including $420 million of share repurchases.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted by 11.3% due to these changes.
Marathon Petroleum Corporation Price and Consensus
At this time, Marathon Petroleum's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum 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.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Marathon Petroleum (MPC) Up 3.5% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Marathon Petroleum Corporation (MPC - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
First-Quarter 2017 Results
Marathon Petroleum reported strong first-quarter earnings on higher gross margins and solid operational performance from its ‘Midstream’ unit.
The company’s earnings per share came in at $0.06, contrary to the Zacks Consensus Estimate for a loss of $0.01.
However, Marathon Petroleum’s revenues of $16,393 million missed the Zacks Consensus Estimate of $19,030.9 million amid lower throughput volumes, though they were up 28% year over year.
Segmental Performance
Refining & Marketing: Operating loss from the Refining & Marketing segment was $70 million compared with a loss of $86 million in the year-ago quarter. The narrower loss reflects higher gross margin, which rose 18% to $11.65 a barrel.
Total refined product sales volumes were 2,085 thousand barrels per day (mbpd), down 3% from the 2,158 mbpd in the year-ago quarter. Moreover, throughput deteriorated from 1,774 mbpd in the year-ago quarter to 1,708 mbpd. Capacity utilization, at 83%, was down from 89% in the first quarter of 2016.
Speedway: Income from the Speedway retail stations totaled $135 million, 19% lower than the $167 million earned in the year-ago period. Fall in merchandise margins hampered the results.
Midstream: This unit includes Marathon Petroleum’s 100% interest in MPLX L.P., a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment profitability was $309 million, up significantly from $189 million in the first quarter of 2016. Earnings were buoyed by new pipeline and marine equity investments as well as increased processing and fractionation activity.
Total Expenses
Marathon Petroleum reported expenses of $16,101 million in first-quarter 2017, 26% higher than $12,755 million in the year-ago quarter.
Capital Expenditure, Balance Sheet & Share Repurchase
In the reported quarter, Marathon Petroleum spent $1,325 million on capital programs (81% on the Midstream segment). As of Mar 31, 2017, the company had cash and cash equivalents of $2,167 million and total debt of $12,598 million, with a debt-to-capitalization ratio of 38%.
During the quarter under review, Marathon Petroleum returned $610 million of capital to shareholders, including $420 million of share repurchases.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted by 11.3% due to these changes.
Marathon Petroleum Corporation Price and Consensus
Marathon Petroleum Corporation Price and Consensus | Marathon Petroleum Corporation Quote
VGM Scores
At this time, Marathon Petroleum's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum 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.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.