Can Marathon (MPC) Retain Its Beat Streak in Q3 Earnings?
Marathon Petroleum Corporation (MPC) is set to release third-quarter results on Oct 31. The Zacks Consensus Estimate for earnings is pegged at a profit of $7.48 per share on revenues of $35.3 billion.
Let’s delve into the factors that might have influenced the independent oil refiner and marketer’s results in the September quarter. However, it’s worth taking a look at MPC’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, the Findlay, OH-based downstream operator’s earnings beat the consensus mark on the back of lower costs and expenses. MPC had reported adjusted earnings per share of $5.32, well above the Zacks Consensus Estimate of $4.55. Revenues of $36.8 billion beat the Zacks Consensus Estimate by 18.7%.
Marathon Petroleum’s earnings beat the consensus estimate in each of the trailing four quarters, delivering an average surprise of 14.48%.
This is depicted in the graph below:
Marathon Petroleum Corporation Price and EPS Surprise
Marathon Petroleum Corporation price-eps-surprise | Marathon Petroleum Corporation Quote
Trend in Estimate Revision
The bottom-line estimate for the third quarter has moved north 6.7% in the past seven days. The estimated figure indicates a 4.2% decline year over year. Meanwhile, the top-line estimate implies a 25.4% decrease from the year-ago period’s level.
Factors to Consider
MPC is expected to have benefited from the strength in refining margins. According to our model, the company’s refining margin in the to-be-reported quarter is likely to have increased to $31.33 per barrel from $30.21 a year ago.
On a further positive note, the reduction in MPC's costs is expected to have boosted its bottom line. Total costs and expenses are likely to have reached $28.9 billion, down 28.8% from the year-ago period’s level. Cost of revenues is expected to have decreased from $38.8 billion to $27.3 billion during the same time frame.
On a bearish note though, higher refining margins are unlikely to aid MPC’s refining unit earnings. According to our model, the Refining and Marketing segment’s operating income is $1.2 billion, down significantly from the prior-year quarter’s level of $4.6 billion. This is likely to have hurt MPC's overall third-quarter financial results. Moreover, per our projections, throughput for the third quarter is 2,930 thousand barrels per day (mbpd), down from 3,007 mbpd recorded in the corresponding period of 2022.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for MPC 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 an earnings beat. However, that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $7.48 per share each.
Zacks Rank: MPC currently carries a Zacks Rank #2.
Stocks to Consider
Here are some firms from the energy space that you may want to consider as these have the right combination of elements to beat on earnings this reporting cycle.
Sitio Royalties Corp. (STR) has an Earnings ESP of +13.38% and a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The firm is scheduled to release earnings on Nov 8.
Sitiohas a trailing four-quarter average earnings surprise of 12.2%. Valued at around 3.8 billion, STR’s shares have lost 12% in a year.
California Resources Corp. CRC has an Earnings ESP of +22.05% and a Zacks Rank #1 at present. The firm is scheduled to release earnings on Nov 1.
Over the past 60 days, the Zacks Consensus Estimate for CRC’s 2023 earnings has moved north 1.4%. The company is valued at $3.7 billion. In the past year, its shares have risen 22%.
Murphy USA MUSA has an Earnings ESP of +0.57% and a Zacks Rank #2 at present. The firm is scheduled to release earnings on Nov 1.
Over the past 60 days, the Zacks Consensus Estimate for Murphy USA’s 2023 earnings has moved north 2.8%. The company is valued at around $7.7 billion. In the past year, its shares have risen 19.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Sitio Royalties Corp. (STR) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
California Resources Corporation (CRC) : Free Stock Analysis Report
