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What Can We Expect from Marathon Petroleum’s 4Q15 Results?

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3Q15 estimated and actual performance

Marathon Petroleum (MPC) is expected to post its 4Q15 results on February 3, 2016. Before we proceed with the company’s 4Q15 estimates, let’s recap MPC’s 3Q15 performance versus estimates.

In 3Q15, MPC’s revenues missed Wall Street analysts’ estimates by 12%. However, in 3Q15, its adjusted EPS (earnings per share) stood at $1.90, around 6% higher than the estimated EPS of $1.80, and 64% higher than 3Q14’s adjusted EPS. This was due to rising refining margins, which have strengthened earnings of refining companies.

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MPC’s 4Q15 result estimates: Expected to be lower

In 4Q15, according to Wall Street analysts’ estimates, MPC is expected to post EPS of $0.70. This is 48% lower than 4Q14’s adjusted EPS and 62% lower than 3Q15’s adjusted EPS. MPC’s revenues are estimated to be around $17 billion in 4Q15, 25% lower than 4Q14 revenues.

In 4Q15, MPC’s refining earnings are likely to be lower compared to those of 3Q15. This is due to the fact that blended LLS (Light Louisiana Sweet) prices and the LLS-WTI (West Texas Intermediate) spread, which impact MPC’s refining income, have fallen. We’ll discuss this in the next part of this series.

In 4Q15, MPC’s peers Valero Energy (VLO), Tesoro (TSO), and Phillips 66 (PSX) are expected to post EPS 50%, 67%, and 56% lower than those of 3Q15, respectively. The iShares Russell 1000 Value ETF (IWD) has ~12% exposure to energy sector stocks. IWD has MPC, VLO, TSO, and PSX in its portfolio.

MPC’s yearly estimates

In 2015, MPC’s revenues are expected to be around $73 billion, 25% lower than those of 2014. However, stronger refining margins are expected to pour down to the bottom line, resulting in higher earnings. MPC, according to Wall Street analysts’ estimates, is expected to post EPS of $5.90 in 2015, around 34% higher than 2014’s adjusted EPS.

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