Conditions in the refining industry have never been better, with a combination of factors bringing crude oil prices down while keeping gasoline and diesel prices high. Yet some storm clouds on the horizon could bring those favorable conditions to an end in the future. Let’s take an early look at what’s been happening with Marathon Petroleum Corp (NYSE:MPC) over the past quarter and what we’re likely to see in its quarterly report.
Stats on Marathon Petroleum
| Analyst EPS Estimate | $2.16 |
| Change From Year-Ago EPS | 27% |
| Revenue Estimate | $19.8 billion |
| Change From Year-Ago Revenue | (2.3%) |
| Earnings Beats in Past 4 Quarters | 4 |
Source: Yahoo! Finance.
How can Marathon Petroleum Corp (NYSE:MPC) keep growing this quarter?
Analysts have boosted their earnings estimates on Marathon Petroleum Corp (NYSE:MPC) sharply in recent months, with a $0.40 per share increase in their first-quarter estimates and a jump of more than $1 per share for their full-year 2013 calls. The stock is up 20% since late January, yet a 10% drop in the past month reflects more recent concerns going forward.
Marathon Petroleum Corp (NYSE:MPC) has capitalized on the supply and demand disparities between U.S. producers and worldwide consumers of energy products. With high demand from resource-poor countries like Japan and South Korea as well as several Western European nations, Marathon Petroleum Corp (NYSE:MPC), Valero Energy Corporation (NYSE:VLO), and Phillips 66 (NYSE:PSX) have all boosted their exports of refined products to more than half a million barrels at the end of 2012.
More recently, though, conditions for Marathon have gotten somewhat less favorable. The premium that energy companies have been willing to pay for Brent crude over U.S. oil has fallen recently, reducing the cost advantage that Marathon Petroleum Corp (NYSE:MPC) and its peers have over foreign refiners. On the regulatory front, Marathon has been buying up ethanol credits in an effort to forestall requirements to blend more ethanol into its gasoline, and proposed new EPA pollution-control regulations could cost Marathon and its peers huge amounts of money to make necessary improvements to facilities.
In Marathon’s quarterly report, watch for how the refiner’s relationship with spun-off midstream pipeline operator MPLX LP (NYSE:MPLX) is faring. With Marathon holding a majority stake in MPLX, its pipeline assets will play an increasingly important role in bringing midcontinent energy products to its refineries.
The article Can Marathon Petroleum Keep Its Profits Up? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.
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