More than month has gone by since the last earnings report for Marathon Petroleum Corporation MPC. Shares have added about 8.6% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Third-Quarter 2017 Results

Marathon Petroleum  reported strong third-quarter results on stronger fuel margin. The company’s earnings per share came in at $1.77, well above the Zacks Consensus Estimate of $1.45. Meanwhile, earnings soared from the year-ago period’s bottom-line figure by 556%. Specifically, refining margin of $14.14 per barrel increased versus $11.32 last quarter and $10.67 a year ago.

Gasoline prices jumped to two-year highs in the wake of Hurricane Harvey that struck the U.S. Gulf Coast – home to more than 45% of domestic oil refining capacity – and caused weeks of disruptions, creating supply shortages. With oil prices essentially remaining unaffected, crack spreads soared.

Marathon Petroleum’s revenues of $19,386 million went past the Zacks Consensus Estimate of $17,808 million and improved 17.8% year over year.

Segmental Performance

Refining & Marketing: Operating income from the Refining & Marketing segment – which is the main contributor to Marathon Petroleum earnings – was $1,097 million compared with $252 million in the year-ago quarter. The jump reflects wider gross margin.

Total refined product sales volumes were 2,357 thousand barrels per day (mbpd), up from the 2,316 mbpd in the year-ago quarter. Moreover, throughput improved from 1,926 mbpd in the year-ago quarter to 2,017 mbpd. Capacity utilization, at 102%, was up from 100% in the third quarter of 2016.

Speedway: Income from the Speedway retail stations totaled $209 million, same as the year-ago period. Contributions from a new joint agreement with Pilot Flying J and declining operating costs were offset by lower volumes, light product margin and merchandise profitability.

Midstream: This unit includes Marathon Petroleum’s 100% interest in MPLX L.P. , a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.

Segment profitability was $355 million, up from $310 million in the second quarter of 2017. Earnings were buoyed by strength in volumes gathered, processed and fractionated.

Total Expenses

Marathon Petroleum reported expenses of $17,810 million in third-quarter 2017, 11.1% higher than the year-ago quarter.

Capital Expenditure, Balance Sheet & Share Repurchase

In the reported quarter, Marathon Petroleum spent $791 million on capital programs (57% on the Midstream segment). As of Sep 30, the company had cash and cash equivalents of $2,088 million and total debt of $12,782 million, with a debt-to-capitalization ratio of 38%.

During the quarter under review, Marathon Petroleum returned $654 million of capital to shareholders, including $452 million of share repurchases.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.

Marathon Petroleum Corporation Price and Consensus

 

Marathon Petroleum Corporation Price and Consensus | Marathon Petroleum Corporation Quote

VGM Scores

At this time, Marathon Petroleum’s stock has a great Growth Score of A, a grade with the same score on the momentum front.  The stock was also allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall,the stocks has an aggregate VGM Score of A. If you aren’t focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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