Zinger Key Points
- Marathon Petroleum's Q3 report will show if strong sales and cash reserves can balance rising costs.
- Investors await updates on shareholder return strategies amidst market challenges.
As Marathon Petroleum Corp MPC prepares to release its third-quarter fiscal year 2024 earnings, investors are focused on the company’s performance indicators and market outlook.
Following a robust second quarter, where total revenues reached $38.362 billion—significantly exceeding the consensus estimate of $35.083 billion—Marathon’s trajectory appears promising, although challenges remain on the horizon.
What To Know: In the second quarter, adjusted EBITDA was reported at $3.39 billion, a notable decline from the $4.53 billion achieved in the same period last year. This decrease was attributed to lower market crack spreads impacting the refining and marketing segment, which saw its adjusted EBITDA fall to $1.972 billion from $3.163 billion a year earlier.
Despite these pressures, the company demonstrated operational resilience, with refining operating costs per barrel improving slightly to $4.97 from $5.15 in the prior year.
Noteworthy was the increase in refined product sales volume, which surged to 3,742 thousand barrels per day (mbpd), up from 3,581 mbpd in the year-ago quarter. This increase was accompanied by a boost in crude oil capacity utilization, climbing to 97%, compared to 93% in the previous year.
Such operational efficiency signals a strong demand for refined products, which could bode well for third-quarter results.
Marathon Petroleum's ability to manage costs effectively has been highlighted by its cash position. As of June 30, the company reported $8.5 billion in cash, cash equivalents, and short-term investments, alongside $5 billion available through its revolving credit facility.
This liquidity position has allowed Marathon to return approximately $3.2 billion to shareholders in the second quarter, including $2.9 billion in share repurchases and $290 million in dividends. The company still has $5.8 billion remaining under its share repurchase authorization, indicating its commitment to shareholder value.
What Else: Looking ahead to the third quarter, Marathon Petroleum anticipates an increase in refining operating costs per barrel, projecting $5.35, along with refinery throughputs of 2,845 mbpd. These expectations suggest a more cautious outlook in the context of rising operational costs, which could impact profitability.
Additionally, the performance of MPLX LP, the master limited partnership in which Marathon holds a majority interest, adds another layer of consideration. In its second-quarter report, MPLX exceeded earnings expectations with $1.15 per limited partner unit compared to the consensus estimate of 99 cents.
The partnership's sales of $3.05 billion also outperformed expectations, and it returned $949 million to unitholders, highlighting the ongoing strength and profitability of Marathon's integrated operations.
As the market anticipates the release of Marathon Petroleum’s third-quarter earnings, investors will be particularly interested in how the company navigates the challenges posed by fluctuating market conditions and operational costs.
How To Buy MPC Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in Marathon Petroleum’s case, it is in the Energy sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
According to data from Benzinga Pro, MPC has a 52-week high of $221.11 and a 52-week low of $140.98.
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