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Is a Beat Likely for Marathon (MPC) This Earnings Season?

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·4 min read
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Marathon Petroleum Corporation MPC is set to release first-quarter 2021 results on Tuesday May 4, before the opening bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s loss is 72 cents per share and for revenues is $15.77 billion.

Against this backdrop, let’s consider the factors that are likely to impact the company’s March-quarter results.

Factors to Consider for Q1 Results

Marathon Petroleum’s midstream unit, which mainly represents its general partner and majority limited partner interests in MPLX LP MPLX, saw a profitability of $974 million in the fourth quarter of 2020, reflecting a 9.6% increase from the year-ago quarter’s reported figure. Earnings were supported by stable, fee-based revenues, lower operating expenses and contribution from organic growth projects, a trend that most likely continued in the first quarter of 2021 as well.

Precisely, the Zacks Consensus Estimate for first-quarter Midstream segment’s profitability is pegged at $929 million, hinting at an improvement of 2.7% from $905 million reported in the year-ago period.

Further, based on regional demand, the company projects total throughput volumes for the first quarter to be a little more than 2.5 million barrels per day, suggesting a modest improvement from the sequential quarter’s reported figure.

On the flip side, the economic disruption caused by the coronavirus outbreak and the resultant shrinking demand for refined products and transportation fuels are likely to have hurt the first-quarter earnings and cash flows of Marathon Petroleum. As a result of this bleak business environment, the Zacks Consensus Estimate for the company’s first-quarter Refining and Marketing segment is pegged at a loss of $946 million. However, a year ago, the unit generated a profit of $519 million.

What Does Our Model Say?

Our proven Zacks model predicts an earnings beat for Marathon Petroleum this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Marathon Petroleum has an Earnings ESP of +2.45%.

Zacks Rank: Marathon Petroleum currently has a Zacks Rank #3, which increases the predictive power of ESP.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, this Findlay, OH-based company reported an adjusted loss of 94 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.42. The company’s bottom line was favorably impacted by cost savings and a stronger-than-expected performance from the Midstream segment. Precisely, operating income from the unit totaled $974 million, ahead of the Zacks Consensus Estimates of $964 million.

However, the bottom line compared unfavorably with the year-earlier quarter's earnings of $1.56 due to depressed refining margins.

Marathon Petroleum reported revenues of $18.2 billion, beating the Zacks Consensus Estimate of $16.7 billion but declined 35.4% year over year.

As far as its earnings surprises are concerned, Marathon Petroleum is on a strong footing. Its bottom line exceeded the Zacks Consensus Estimate in all the trailing four quarters, the average being 34.62%. This is depicted in the graph below:

Marathon Petroleum Corporation Price and EPS Surprise

Marathon Petroleum Corporation Price and EPS Surprise
Marathon Petroleum Corporation Price and EPS Surprise

Marathon Petroleum Corporation price-eps-surprise | Marathon Petroleum Corporation Quote

Other Stocks to Consider

Some other firms worth considering from the energy space on the basis of our model that shows that these too have the right combination of elements to beat on earnings this season are as follows:

Chevron Corporation CVX has an Earnings ESP of +3.32% and a Zacks Rank of 3, currently. The firm is scheduled to release earnings on Apr 30.

NuStar Energy L.P. NS has an Earnings ESP of +19.72% and is Zacks #3 Ranked, presently. The firm is scheduled to release earnings on May 4.

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