Results: Marathon Petroleum Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Marathon Petroleum Corporation (NYSE:MPC) came out with its third-quarter results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks to have been a decent result overall – while revenue fell marginally short of analyst estimates at US$31b, earnings beat expectations by a notable 23%, coming in at US$1.66 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we collected the latest post-earnings consensus estimates to see what could be in store for next year.

See our latest analysis for Marathon Petroleum

NYSE:MPC Past and Future Earnings, November 4th 2019
NYSE:MPC Past and Future Earnings, November 4th 2019

Taking into account the latest results, the most recent consensus for Marathon Petroleum from 14 analysts is for revenues of US$138b in 2020, which is a meaningful 9.9% increase on its sales over the past 12 months. Earnings per share are expected to soar 67% to US$7.87. Before this earnings report, analysts had been forecasting revenues of US$138b and earnings per share (EPS) of US$7.82 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$79.05. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Marathon Petroleum at US$98.00 per share, while the most bearish prices it at US$65.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Analysts are definitely expecting Marathon Petroleum’s growth to accelerate, with the forecast 9.9% growth ranking favourably alongside historical growth of 7.6% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Marathon Petroleum to grow faster than the wider market.

The Bottom Line

The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that Marathon Petroleum’s revenues are expected to grow faster than the wider market. The consensus price target held steady at US$79.05, with the latest estimates not enough to have an impact on analysts’ estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Marathon Petroleum going out to 2023, and you can see them free on our platform here..

It might also be worth considering whether Marathon Petroleum’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.