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Marathon (MPC) Q2 Earnings Top as Refining Margins Strengthen

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Independent oil refiner and marketer Marathon Petroleum Corporation MPC reported second-quarter adjusted earnings of 67 cents per share, which beat the Zacks Consensus Estimate of 45 cents and compared with a loss of $1.33 per share in the year-ago period. The company’s bottom line was favourably impacted by stronger-than-expected performance from both segments. Precisely, operating income from the Refining & Marketing and the Midstream units totaled $224 million and $977 million, respectively, ahead of their Zacks Consensus Estimate of $145 million and $949 million.

Marathon Petroleum reported revenues of $29.8 billion that beat the Zacks Consensus Estimate of $17.3 billion and improved 142.5% year over year.

The company repurchased shares worth $1 billion during the second quarter as part of its announcement to buy back $10 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven &i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion.

Marathon Petroleum Corporation Price, Consensus and EPS Surprise

Marathon Petroleum Corporation Price, Consensus and EPS Surprise
Marathon Petroleum Corporation Price, Consensus and EPS Surprise

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

Y/Y Segmental Performance

Refining & Marketing: The Refining & Marketing segment reported operating income of $224 million, turning around from the year-ago loss of $1.5 billion. The improvement reflects higher y/y margins.

Specifically, refining margin of $12.45 per barrel increased from $7.64 a year ago. Total refined product sales volumes were 3,489 thousand barrels per day (mbpd), up from the 2,878 mbpd in the year-ago quarter. Throughput rose from 2,276 mbpd in the year-ago quarter to 2,854 mbpd and it beat the Zacks Consensus Estimate of 2,774 mbpd. Capacity utilization during the quarter was up from last year’s 71% to 94%.

Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP MPLX – a publicly traded master limited partnerships that own, operate, develop and acquire pipelines and other midstream assets.

Segment profitability was $977 million, 12.4% higher than the second quarter of 2020 and ahead of the Zacks Consensus Estimate of $949 million. Earnings were supported by stable, fee-based revenues and lower operating expenses.

Costs, Capex & Balance Sheet

Marathon Petroleum reported expenses of $28.9 billion in second-quarter 2021, surging 146.2% from the year-ago quarter.

In the reported quarter, Marathon Petroleum spent $467 million on capital programs (38% each on Refining & Marketing and the Midstream segments) compared to $807 million in the year-ago period. As of Jun 30, the company had cash and cash equivalents of $11.8 billion and a total debt, including that of MPLX, of $28.3 billion, with a debt-to-capitalization of 44.2%.

Zacks Rank & Stock Picks

Marathon Petroleum carries a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space are Ovintiv OVV and Suncor Energy SU. Both companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ovintiv has an expected earnings growth rate of 1,177.14% for the current year.

Suncor Energy has an expected earnings growth rate of 281.82% for the current year.


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