Yahoo Finance Marathon Petroleum (MPC) Down 3.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Marathon Petroleum (MPC). Shares have lost about 3.6% 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 Q1 Earnings Beat Estimates
Marathon Petroleum Corporation reported first-quarter adjusted earnings per share of $2.78, which comfortably beat the Zacks Consensus Estimate of $2.53. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $766 billion, surpassing the consensus mark of $660 million.
However, the company’s bottom line fell from the year-ago adjusted profit of $6.09 due to a higher unit operating cost and a drop in refining margin.
Marathon Petroleum reported revenues of $33.2 billion, which beat the Zacks Consensus Estimate of $31.3 billion but declined 5.3% year over year.
Inside MPC’s Segments
Refining & Marketing: The Refining & Marketing segment reported an operating income of $766 million, which fell 74.7% from the year-ago profit of $3 billion. The drop primarily reflects lower year-over-year margins and a decrease in capacity utilization.
Specifically, the refining margin of $18.99 per barrel declined from $26.15 a year ago. Capacity utilization during the quarter was 82%, down from 89% in the corresponding period of 2023.
Meanwhile, total refined product sales volumes were 3,277 thousand barrels per day (mbpd), down from 3,352 mbpd in the year-ago quarter. Also, throughput dropped from 2,837 mbpd in the year-ago quarter to 2,664 mbpd and underperformed the Zacks Consensus Estimate of 2,728 mbpd.
MPC’s operating costs per barrel increased from $5.68 in the year-ago quarter to $6.14.
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 2.7% from the first quarter of 2023. Earnings were buoyed up by higher rates and volumes processed.
Financial Analysis
Marathon Petroleum reported expenses of $31.4 billion in first-quarter 2024, up 1.3% from the year-ago quarter.
In the reported quarter, Marathon Petroleum spent $636 million on capital programs (46% on Refining & Marketing and 51% on the Midstream segment) compared to $690 million in the year-ago period.
As of Mar 31, the company had cash and cash equivalents of $3.2 billion and total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 48.3%.
In the first quarter, MPC repurchased $2.2 billion of shares and a further $800 million worth of shares in April. The company, which gave an additional $5 billion share repurchase approval, currently has a remaining authorization of $8.8 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 -16.38% due to these changes.
VGM Scores
At this time, Marathon Petroleum has an average Growth Score of C, 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 #1 (Strong Buy). We expect an above average 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, Valero Energy (VLO), a stock from the same industry, has gained 0%. The company reported its results for the quarter ended March 2024 more than a month ago.
Valero Energy reported revenues of $31.76 billion in the last reported quarter, representing a year-over-year change of -12.8%. EPS of $3.82 for the same period compares with $8.27 a year ago.
Valero Energy is expected to post earnings of $5.37 per share for the current quarter, representing a year-over-year change of -0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Valero Energy. Also, the stock has a VGM Score of A.
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Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
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