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Will Marathon Petroleum’s Q1 Earnings Rise?

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Fourth-quarter performance

Marathon Petroleum (MPC) is scheduled to report its first-quarter results on May 8. Before we proceed with the first-quarter estimates, we’ll recap Marathon Petroleum’s fourth-quarter performance.

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In the fourth quarter, Marathon Petroleum’s revenues were $32.5 billion, which fell short of analysts’ estimates. Marathon Petroleum reported an EPS of $1.35 in the fourth quarter. However, Marathon Petroleum’s adjusted EPS was $2.22, which beat analysts’ estimated EPS of $1.96.

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First-quarter estimates

Marathon Petroleum is estimated to post an EPS of $0.08 in the first quarter, which is ~103% higher than its EPS in the first quarter of 2018. However, Marathon Petroleum’s first-quarter estimated EPS is 96% lower than its EPS in the fourth quarter of 2018. Marathon Petroleum’s revenues are estimated to be ~$27.6 billion in the first quarter—45% higher than its revenues in the first quarter of 2018.

Marathon Petroleum’s revenues and earnings are estimated to rise due to the benefit from the integration of Andeavor. Marathon Petroleum’s leading refining earnings indicator, the blended crack rose marginally year-over-year in the first quarter.

Marathon Petroleum closed the acquisition of Andeavor in the fourth quarter. The first-quarter earnings would reflect the merged entity’s financials. The acquisition has created the largest downstream company in the United States, which is expected to generate substantial synergies, earnings, and cash flows.

Peers’ expectation

Valero Energy (VLO), Phillips 66 (PSX), and HollyFrontier (HFC) could post 75% YoY, 63% YoY, and 43% YoY lower EPS in the first quarter, respectively. However, Delek US Holdings (DK) could post an EPS of $0.45 in the first quarter compared to an adjusted loss in the first quarter of 2018.

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