Behind Marathon Petroleum’s Big Stock Gains since February
What's the Latest on Downstream Major Marathon Petroleum?
Recent gains in refining stocks
In 2015, the US refining industry reaped the benefits of low oil prices, as can be seen in the stock price performances of refining companies. However, refining stocks started falling in December 2015 with the news of the abolition of the crude oil export ban in the US, which raised fears of a decline in the refining margins of US refineries. Also, the swelling inventory levels of refined products and narrowing cracks put further pressure on refining stocks.
But the downward journey halted in February 2016, at which point refining cracks started strengthening. At the same time, the refining margin indicators of major refining companies started to show improvement, which was the likely reason that refining stocks began firming up.
MPC’s stock—the latest uptrend
Marathon Petroleum Corporation’s (MPC) stock, continuing its 2015 trend, had a weak opening in 2016, when MPC was trading below its 50-day and 200-day moving averages. But due to improving cracks, MPC started rising in February. From February 8 to April 4, amid industry volatility, MPC’s stock rose by 19% and crossed over its 50-day moving average.
During the same period, Tesoro (TSO) and Phillips 66 (PSX) rose by 15% and 12%, respectively, while PBF Energy (PBF) gained by 23%. Currently, MPC is trading above its 50-day moving average. However, the stock continues to trade below its 200-day moving average.
For exposure to refining sector stocks, investors can consider the iShares US Oil & Gas Exploration & Production ETF (IEO), which has ~27% exposure to the sector.
MPC’s 4Q15 earnings
In 4Q15, MPC’s net income of $187 million fell by 77% compared to 4Q14. This was due to a fall in the operating incomes of its refining and Speedway (marketing) segments, which was partly offset by a rise in income from its midstream segment. Also, the company faced a combined charge of $370 million, due to lower costs or market inventory valuations levied on its refining and Speedway segments. MPC’s adjusted EPS (earnings per share) stood at $0.79 for the quarter.
Now let’s take a look at what analysts are saying about Marathon Petroleum.
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