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Marathon (MPC) Q3 Earnings Top as Refining Margins Strengthen

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·3 min read
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  • MPC
  • SU
  • OVV

Independent oil refiner and marketer Marathon Petroleum Corporation MPC reported adjusted earnings of 73 cents per share, which beat the Zacks Consensus Estimate of 72 cents. It had incurred a loss of $1.00 per share in the year-ago period.

The company’s bottom line was favorably impacted by stronger-than-expected performance from both segments. Precisely, operating income from the Refining & Marketing and the Midstream units totaled $509 million and $1 billion, respectively, ahead of their Zacks Consensus Estimate of $484 million and $984 million.

Marathon Petroleum reported revenues of $32.6 billion that beat the Zacks Consensus Estimate of $17.1 billion and improved 85.9% year over year.

The company repurchased shares worth $1.5 billion during the July-October period 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 $509 million, turning around from the year-ago loss of $1.6 billion. The improvement primarily reflects higher y/y margins.

Specifically, refining margin of $14.51 per barrel increased from $8.28 a year ago. Total refined product sales volumes were 3,539 thousand barrels per day (mbpd), up from the 3,201 mbpd in the year-ago quarter. Throughput rose from 2,536 mbpd in the year-ago quarter to 2,836 mbpd and it beat the Zacks Consensus Estimate of 2,815 mbpd. Capacity utilization during the quarter was up from last year’s 84% to 93%.

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 $1 billion, 8.5% higher than the third quarter of 2020 and ahead of the Zacks Consensus Estimate of $984 million. Earnings were supported by stable, fee-based revenues and lower operating expenses.

Costs, Capex & Balance Sheet

Marathon Petroleum reported expenses of $31.3 billion in third-quarter 2021, surging 68.1% from the year-ago quarter.

In the reported quarter, Marathon Petroleum spent $464 million on capital programs (49% on Refining & Marketing and 41% on the Midstream segment) compared to $668 million in the year-ago period. As of Sep 30, the company had cash and cash equivalents of $5.9 billion and a total debt, including that of MPLX, of $27.3 billion, with a debt-to-capitalization of 43.9%.

Zacks Rank & Stock Picks

Marathon Petroleum carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Ovintiv OVV and Suncor Energy SU. Both the 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 1,431.43% for the current year.

Suncor Energy has an expected earnings growth rate of 287.27% for the current year.


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Ovintiv Inc. (OVV) : Free Stock Analysis Report

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