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Marathon Petroleum (MPC) Q1 Earnings Lag, Revenues Top

Ohio-based independent oil refiner and marketer, Marathon Petroleum Corp. MPC reported weak first-quarter 2016 earnings, owing to weak crack spreads and increased turnaround activity.     

The company reported earnings per share of 6 cents, which failed to surpass the Zacks Consensus Estimate of 17 cents. The bottom line also fell from the year-ago period adjusted profit of $1.62.

However, quarterly revenues of $12,830 million beat the Zacks Consensus Estimate of $10,881 million. The top line fell from the year-ago figure of $17,240 million.   

Segmental Performance

Refining & Marketing:The unit incurred a loss of 62 million in the reported quarter, while in the year-ago quarter it had reported profits of $1,292 million. Lower gross margin owing to decreased crack spread along with increased operating expenses led to the underperformance.

Total refined product sales volumes were 2,148 thousand barrels per day (mbpd), lower than 2,233 mbpd in the year-ago quarter. Throughput fell from 1,852 mbpd in the year-ago quarter to 1,774 mbpd.       

Speedway:Income from the Speedway retail stations totaled $167 million, almost the same as the year-ago comparable quarter. Improved margins from merchandise aided the results.

Midstream: Segment profitability was $167 million, significantly up from $90 million in the first quarter of 2015. Earnings were propped up by the completion of the MarkWest acquisition on Dec 4, 2015.

Total Expenses

Marathon Petroleum reported expenses of $12.8 billion in first-quarter 2016, lower than $15.8 billion in the year-ago quarter.

Capital Expenditure, Balance Sheet & Share Repurchase

In the reported quarter, Marathon Petroleum spent $684 million on capital programs (51.2% on the Midstream segment). As of Mar 31, 2016, the company had cash and cash equivalents of 308 million and total debt of $11,566 million, with a debt-to-capitalization ratio of 37%.     

Zacks Rank   

Marathon Petroleum currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Some, better-ranked players in the energy sector include Vanguard Natural Resources LLC VNR, PetroChina Co. Ltd. PTR and World Point Terminals, LP WPT. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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