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Things to Know Before Marathon Petroleum's (MPC) Q3 Earnings

Marathon Petroleum Corporation MPC is set to release third-quarter 2020 results on Monday Nov 2, before the opening bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s loss is $1.63 per share and for revenues is $19.93 billion.

Against this backdrop, let’s consider the factors that are likely to impact the company’s September-quarter results.

Factors to Consider for Q3 Results

The economic disruption caused by the coronavirus outbreak and the associated diminished demand for refined products and transportation fuels on account of widespread travel restrictions are likely to have hurt the third-quarter earnings and cash flows of Marathon Petroleum. As a result of the bleak business environment, the Zacks Consensus Estimate for the company’s third-quarter Refining and Marketing segment is pegged at a loss of $2.01 billion. However, a year ago, the unit generated profit of $883 million.

Moreover, the Zacks Consensus Estimate for third-quarter Midstream segment’s profitability is pegged at $888 million, hinting at a decline of 3.37% from $919 million reported in the year-ago period due to lower transportation demand following the coronavirus outbreak.

Further, the Zacks Consensus Estimate for refinery throughput stands at 2,378 thousand barrels per day (mbpd), suggesting a fall from the year-ago reported number of 3,156 mbpd.

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 -6.77%.

Zacks Rank: Marathon Petroleum carries a Zacks Rank #4 (Sell), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, this Findlay, OH-based company reported an adjusted loss of $1.33 per share, narrower than the Zacks Consensus Estimate of a loss of $1.86. The company’s bottom line was favorably impacted by a better-than-expected performance from the Retail and Midstream segments. Operating income from the units totaled $494 million and $869 million, ahead of the respective Zacks Consensus Estimate of $403 million and $807 million, respectively.

However, the bottom line came against the year-earlier quarter's earnings of $1.73 due to weak showing from the Refining & Marketing segment. The unit’s results were dragged down by dented refining margins.

Marathon Petroleum reported revenues of $15.2 billion that missed the Zacks Consensus Estimate of $16.2 billion and also declined 54.9% year over year.

As far as its earnings surprises are concerned, Marathon Petroleum is on a strong footing. Its bottom line exceeded the Zacks Consensus Estimate in all the trailing four quarters, the average being 42.68%. This is depicted in the graph below:

Stocks to Consider

While earnings outperformance looks doubtful for Marathon Petroleum, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the perfect combination of ingredients to deliver a positive surprise this reporting cycle:

Marathon Oil Corporation MRO has an Earnings ESP of +1.50% and is Zacks #3 Ranked at present. The company is scheduled to release earnings on Nov 4.

NuStar Energy L.P. NS has an Earnings ESP of +2.94% and a Zacks Rank #2, presently. The firm is scheduled to release earnings on Nov 5.

Targa Resources, Inc. TRGP has an Earnings ESP of +33.33% and a Zacks Rank #3, currently. The company is scheduled to release earnings on Nov 5.

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