Where Do Marathon Petroleum’s Moving Averages Stand ahead of Its 3Q17 Results?
Marathon Petroleum’s moving averages
On July 3, 2017, Marathon Petroleum’s (MPC) 50-day moving average rose above its 200-day moving average. Since then, its refining earnings indicators have risen, particularly on the impact of Hurricane Harvey on refining cracks.
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MPC’s 50-day moving average has remained above its 200-day moving average since July 3, likely due to the re-organization of business assets aimed at increasing shareholder value. MPC executed another dropdown in 3Q17 in its joint-ownership in some pipelines and storage facilities to MPLX (MPLX), MPC’s midstream MLP.
These assets are estimated to generate $138 million of annual EBITDA (earnings before interest, tax, depreciation, and amortization) in 2018. The assets were valued at $1.05 billion, which was funded via equity and cash.
The restructuring plan
The restructuring plan broadly includes the dropdown of midstream assets to MPLX (MPLX), the exchange of its economic interest in GPs and IDRs for fresh MPLX units, and the separation of Speedway or retail segment. However, the plan to separate Speedway has been dropped. MPC has concluded that Speedway could create more value if it remained integrated within MPC.
The completion of the restructuring exercise will likely result in an upsurge in MPC’s valuation. The stock is now in an uptrend, and its 50-day moving average stands 3% over its 200-day moving average.
Marathon Petroleum’s moving averages imply a possible bullish bias. If MPC’s 3Q17 earnings, which are scheduled on October 26, 2017, beat their estimates then MPC stock could rally even higher.
Peer moving averages
Peers Andeavor (ANDV), Valero Energy (VLO), and Phillips 66 (PSX) have 50-day moving averages of 12%, 5%, and 6% above their 200-day moving averages, respectively. HollyFrontier (HFC) and PBF Energy’s (PBF) 50-day moving averages stand 10% and 5% above their 200-day moving averages, respectively.
The SPDR Dow Jones Industrial Average ETF’s (DIA), which represents the overall economy and spans diverse industries, has a 50-day moving average that is 5% above its 200-day moving average.
Continue to the next part for a look at MPC’s price estimates before the earnings.