Things to Know Before Marathon Petroleum's (MPC) Q1 Earnings

Marathon Petroleum Corporation MPC is set to release first-quarter 2020 results on Tuesday May 5, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s loss is 41 cents per share and for revenues is $28.4 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 first-quarter results are likely to reflect robust refining margins and synergies from 2018's Andeavor acquisition.

Its retail division is expected to have benefited from higher year-over-year margins and sales owing to Speedway and the acquired retail assets of Andeavor. The Zacks Consensus Estimate for first-quarter Retail segment profitability is pegged at $336 million, indicating a 97.6% rise from $170 million reported in the year-ago period. The Zacks Consensus Estimate for merchandise gross margins stands at $427 million, suggesting an increase of 5% from $407 million reported at the end of first-quarter 2019. Moreover, the company projects first-quarter merchandise sales in the $1.45-$1.55 billion range, implying growth from the year-ago reported figure of $1.41 billion.

However, the Zacks Consensus Estimate for first-quarter Midstream segment profitability is pegged at $894 million, hinting at a decline from $908 million reported in the year-ago period due to lower transportation demand following the coronavirus outbreak.

Moreover, the Zacks Consensus Estimate for refinery throughput stands at 3,053 thousand barrels per day (mbpd), suggesting a fall from the year-ago reported number of 3,084 mbpd. Meanwhile, the Zacks Consensus Estimate for the company’s profitability in its largest segment is pinned at $7.18 billion, implying a turnaround from the year-ago quarter’s loss of $334 million, primarily on solid margins.

What Does Our Model Say?

Our proven Zacks model does not conclusively predict 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. But 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: Marathon Petroleum has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 85 cents each.

Zacks Rank: Marathon Petroleum carries a Zacks Rank #3.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, this Findlay, OH-based company’s adjusted earnings per share of $1.56 were above the Zacks Consensus Estimate of 85 cents.The beat was driven by higher-than-expected throughput and refined product sales volume, which helped the ‘Refining & Marketing’ segment income top estimates. However, the bottom line declined 35.3% from the year-earlier quarter's earnings due to weakness in the Midstream segment.

The company’s revenues of $31.4 billion surpassed the Zacks Consensus Estimate of $29.7 billion but dipped 3.6% year over year.

As far as its earnings surprises are concerned, Marathon Petroleum is on a strong footing, having exceeded the Zacks Consensus Estimate thrice in the last four reports. 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-eps-surprise | Marathon Petroleum Corporation Quote

Stocks to Consider

While an earnings beat looks uncertain for Marathon Petroleum, here are some firms worth considering from the energy space as our model shows that these have the right combination of elements to outpace estimates this reporting cycle:

Devon Energy Corporation DVN has an Earnings ESP of +3.80% and a Zacks Rank of 3. The firm is scheduled to release earnings on May 5.

Comstock Resources, Inc. CRK has an Earnings ESP of +2.63% and a Zacks Rank #2. The company is scheduled to release earnings on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Laredo Petroleum, Inc. LPI has an Earnings ESP of +2.50% and is Zacks #3 Ranked. The firm is scheduled to release earnings on May 6.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Comstock Resources, Inc. (CRK) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
Laredo Petroleum, Inc. (LPI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research