It has been about a month since the last earnings report for Marathon Petroleum (MPC). Shares have lost about 14.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marathon Petroleum due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Marathon Petroleum reported fourth-quarter adjusted earnings per share of 77 cents, which comfortably beat the Zacks Consensus Estimate of 6 cents. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment.
The adjusted EBITDA of the segment totaled $559 million, surpassing the consensus mark, calling for a profit of $188 million on the back of lower costs and higher throughput.
However, the company’s bottom line fell sharply from the year-ago adjusted profit of $3.98 due to a drop in refining margin.
Marathon Petroleum reported revenues of $33.5 billion, which beat the Zacks Consensus Estimate of $30.7 billion but fell 9.1% year over year.
Refining & Marketing: The Refining & Marketing segment reported adjusted EBITDA of $559 million, which plunged more than 75% from the year-ago profit of $2.2 billion. The drop primarily reflects lower year-over-year margins, partly offset by stronger throughput and lower costs.
Specifically, the refining margin of $12.93 per barrel declined from $17.81 a year ago. Capacity utilization during the quarter was 94% compared to 91% in the corresponding period of 2023.
Meanwhile, total refined product sales volumes were 3,747 thousand barrels per day (mbpd), up from 3,583 mbpd in the year-ago quarter. Throughput rose from 2,922 mbpd in the year-ago quarter to 2,997 mbpd and outperformed the Zacks Consensus Estimate of 2,915 mbpd.
MPC’s operating costs per barrel decreased from $5.55 in the year-ago quarter to $5.26.
Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
Segment adjusted EBITDA was $1.7 billion, up 8.7% from the fourth quarter of 2023. Earnings were buoyed up by higher rates and volumes processed, together with contributions from the acquired assets in the Utica and Permian basins.
Marathon Petroleum reported expenses of $32.3 billion in fourth-quarter 2024, down 6.1% from the year-ago quarter.
In the reported quarter, Marathon Petroleum spent $921 million on capital programs (53% on Refining & Marketing and 41% on the Midstream segment) compared to $780 million in the year-ago period.
As of Dec. 31, the company had cash and cash equivalents of $3.2 billion and total debt, including that of MPLX, of $27.5 billion, with a debt-to-capitalization of 53.1%.
In the fourth quarter, MPC repurchased $1.3 billion of shares. It currently has a remaining authorization of $7.8 billion.
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -68.03% due to these changes.
At this time, Marathon Petroleum has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Marathon Petroleum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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