Marathon Petroleum (MPC): What's Likely In Q2 Earnings?

Independent oil refiner and marketer Marathon Petroleum Corp. (NYSE:MPC) is set to release second-quarter 2016 financial results before the opening bell on Jul 28.

The company failed to meet the Zacks Consensus Estimate in three of the trailing four quarters and delivered an average negative surprise of 16.05%. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

Through the quarter, oil price improved significantly from mid-February when West Texas Intermediate (WTI) crude fell to a 12-year low mark of $26.05 per barrel. Moreover, last month, oil prices settled above the psychologically important $50 per barrel level for the first time in more than 10 months.

This news did not favor refiners as they have to buy raw crude to produce refined petroleum products like gasoline. With the improvement in the price of black-gold, it has become costlier for refiners to purchase crude which led to higher input cost. This might impact Marathon Petroleum’s profits.

The company also predicted throughput volumes to be low during the quarter as compared to April to June period of 2015.

Earnings Whispers?

Our proven model does not conclusively show that Marathon Petroleum is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below:

Zacks ESP: Marathon Petroleum currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 95 cents per share.

Zacks Rank: Marathon Petroleum carries a Zacks Rank #5 (Strong Sell).

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

MARATHON PETROL Price, Consensus and EPS Surprise

MARATHON PETROL Price, Consensus and EPS Surprise | MARATHON PETROL Quote

Stocks to Consider

Here are some companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:

Anadarko Petroleum Corporation (NYSE:APC) has an Earnings ESP of +1.30% and a Zacks Rank #2 (Buy). The company is likely to release earnings results on Jul 26.

Legacy Reserves LP (NASDAQ:LGCY) has an Earnings ESP of +31.58% and a Zacks Rank #1 (Strong Buy). The partnership is expected to release earnings results on Aug 3.

Pioneer Natural Resources Co. (NYSE:PXD) has an Earnings ESP of +19.44% and a Zacks Rank #2. The company is anticipated to release earnings on July 27.