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Refining Unit to Buoy Marathon Petroleum (MPC) Q3 Earnings?
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Independent oil refiner and marketer Marathon Petroleum Corp. (MPC - Free Report) is scheduled to report its third-quarter earnings on Thursday, Oct 26, before market opens.
In the preceding three-month period, the company delivered a negative earnings surprise of 0.96% on lower gross margins and elevated costs. In particular, operating income from the Refining & Marketing segment – which is the main contributor to Marathon Petroleum earnings – fell to $562 million compared with $1,025 million in the year-ago quarter.
As far as earnings surprises are concerned, the Findlay, OH-based downstream operator has a mixed history. It went past the Zacks Consensus Estimate twice in the last four reports.
Marathon Petroleum Corporation Price and EPS Surprise
However, things do look bright for the company in the quarter under review. In fact, the positive sentiment surrounding the stock can be gauged from the Zacks Consensus Estimate for the third quarter, which moved up 7.4% over the last 7 days.
Moreover, shares of Marathon Petroleum have done better than the peer group so far this year. The stock has been up 14.2%, as against the Zacks Oil Refining & Marketing industry’s gain of just 2.5%.
Let’s delve deep to find out the factors likely to impact Marathon Petroleum’s third-quarter results.
Factors to Consider This Quarter
We expect improving refining outlook to buoy the company’s bottom line in the third quarter of 2017. With margin estimates going up and throughput set to be higher, Marathon Petroleum’s refining and marketing unit is expected to report solid quarterly results.
The Zacks Consensus Estimate for the quarter’s revenues from refining and marketing is pegged at $419 million, 36.9% higher than the reported figure in the third quarter of 2016.
Meanwhile, we expect profitability for the midstream (or pipeline transportation) segment to be $420 million, up from $258 million in the third quarter of 2016. Earnings will be likely driven by solid process and fractionation volumes, along with contribution from investments in new projects.
Amid the encouraging scenario, the impact from Hurricane Harvey is expected to play a minor role in the quarter. We expect a fairly negligible effect on throughput/operations on the combined Galveston Bay/Texas City facilities, while cost increase is also likely to have a small negative effect on Marathon Petroleum’s quarterly results.
Overall, the significant uptick in the refining business will likely offset any negative impact.
What Does Our Model Say?
Our proven model too shows that Marathon Petroleum is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP for this company stands at +0.14%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Marathon Petroleum carries a Zacks Rank #3 (Hold) which, when combined with a positive ESP, makes us confident of an earnings beat.
Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. On the other hand, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Which Other Energy Companies Have Positive Surprise in Store?
Marathon Petroleum is not the only energy firms looking up this earnings season. Here are some companies from the space which, according to our model, also have the right combination of elements to post earnings beat this quarter:
Suncor Energy Inc. (SU - Free Report) has an Earnings ESP of +8.07% and a Zacks Rank #2. The partnership is anticipated to release earnings on Oct 25.
National Oilwell Varco Inc. (NOV - Free Report) has an Earnings ESP of +10.91% and a Zacks Rank #3. The company is expected to release earnings results on Oct 26.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Refining Unit to Buoy Marathon Petroleum (MPC) Q3 Earnings?
Independent oil refiner and marketer Marathon Petroleum Corp. (MPC - Free Report) is scheduled to report its third-quarter earnings on Thursday, Oct 26, before market opens.
In the preceding three-month period, the company delivered a negative earnings surprise of 0.96% on lower gross margins and elevated costs. In particular, operating income from the Refining & Marketing segment – which is the main contributor to Marathon Petroleum earnings – fell to $562 million compared with $1,025 million in the year-ago quarter.
As far as earnings surprises are concerned, the Findlay, OH-based downstream operator has a mixed history. It went past the Zacks Consensus Estimate twice in the last four reports.
Marathon Petroleum Corporation Price and EPS Surprise
Marathon Petroleum Corporation Price and EPS Surprise | Marathon Petroleum Corporation Quote
However, things do look bright for the company in the quarter under review. In fact, the positive sentiment surrounding the stock can be gauged from the Zacks Consensus Estimate for the third quarter, which moved up 7.4% over the last 7 days.
Moreover, shares of Marathon Petroleum have done better than the peer group so far this year. The stock has been up 14.2%, as against the Zacks Oil Refining & Marketing industry’s gain of just 2.5%.
Let’s delve deep to find out the factors likely to impact Marathon Petroleum’s third-quarter results.
Factors to Consider This Quarter
We expect improving refining outlook to buoy the company’s bottom line in the third quarter of 2017. With margin estimates going up and throughput set to be higher, Marathon Petroleum’s refining and marketing unit is expected to report solid quarterly results.
The Zacks Consensus Estimate for the quarter’s revenues from refining and marketing is pegged at $419 million, 36.9% higher than the reported figure in the third quarter of 2016.
Meanwhile, we expect profitability for the midstream (or pipeline transportation) segment to be $420 million, up from $258 million in the third quarter of 2016. Earnings will be likely driven by solid process and fractionation volumes, along with contribution from investments in new projects.
Amid the encouraging scenario, the impact from Hurricane Harvey is expected to play a minor role in the quarter. We expect a fairly negligible effect on throughput/operations on the combined Galveston Bay/Texas City facilities, while cost increase is also likely to have a small negative effect on Marathon Petroleum’s quarterly results.
Overall, the significant uptick in the refining business will likely offset any negative impact.
What Does Our Model Say?
Our proven model too shows that Marathon Petroleum is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP for this company stands at +0.14%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Marathon Petroleum carries a Zacks Rank #3 (Hold) which, when combined with a positive ESP, makes us confident of an earnings beat.
Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. On the other hand, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Which Other Energy Companies Have Positive Surprise in Store?
Marathon Petroleum is not the only energy firms looking up this earnings season. Here are some companies from the space which, according to our model, also have the right combination of elements to post earnings beat this quarter:
Denbury Resources Inc. has an Earnings ESP of +100% and a Zacks Rank #1. The company is likely to release earnings on Nov 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Suncor Energy Inc. (SU - Free Report) has an Earnings ESP of +8.07% and a Zacks Rank #2. The partnership is anticipated to release earnings on Oct 25.
National Oilwell Varco Inc. (NOV - Free Report) has an Earnings ESP of +10.91% and a Zacks Rank #3. The company is expected to release earnings results on Oct 26.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>