MPLX Gears Up to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

MPLX LP MPLX is set to report fourth-quarter 2019 results on Jan 29, before the opening bell.

In the last reported quarter, MPLX — sponsored by Marathon Petroleum MPC — came up with earnings of 61 cents per unit that beat the Zacks Consensus Estimate of 59 cents. The bottom line was supported by higher throughput volumes, strong performance of its core business and the acquisition of Andeavor Logistics.   

However, the midstream service provider delivered a four-quarter negative earnings surprise of 6.3%, on average, as shown in the chart below.

MPLX LP Price and EPS Surprise

MPLX LP Price and EPS Surprise

MPLX LP price-eps-surprise | MPLX LP Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for fourth-quarter earnings of 61 cents has seen two upward revisions and no downward movement in the past 30 days. The figure suggests a year-over-year increase of 17.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $2.2 billion for the quarter, indicating an improvement of 29.8% from the year-ago reported figure.

Factors to Consider

Findlay, OH-based MPLX is engaged in providing a wide range of midstream energy services, including fuel distribution solutions. Therefore, it is least exposed to commodity price fluctuations and is expected to have generated stable fee-based revenues in the fourth quarter via long-term contracts.

The Zacks Consensus Estimate for the partnership’s product pipelines throughput volumes is pegged at 1,896 thousand barrels per day (MBbls/d), suggesting a rise from 1,295 MBbls/d in the December quarter of 2018. Moreover, the consensus estimate for average tariff rates from the product pipelines is pegged at 78 cents per barrel, suggesting no change from the year-ago quarter. Hence, favorable tariff rates and higher throughput volumes from the product pipelines are likely to have favored the partnership’s bottom line.

Investors should also note that the Zacks Consensus Estimate for the partnership’s crude oil pipelines throughput volumes is 3,727 MBbls/d, indicating an increase from 2,273 MBbls/d in the year-ago quarter. Markedly, the consensus estimate for average tariff rates from the crude oil pipelines is pegged at 96 cents per barrel, which suggests a jump from the year-ago figure of 60 cents. Thus, crude oil pipelines are expected to have contributed handsomely to the partnership’s fourth-quarter earnings. 

However, gathering throughput volumes from the partnership’s Southwest operations are projected at 1,515 million cubic feet per day (mmcf/d), suggesting a decline from the year-ago quarter’s 1,694 mmcf/d. The same from Utica operations is estimated to be 1,661 mmcf/d, implying a fall from the year-ago level of 2,067 mmcf/d. These downsides can partially offset the gains in profit levels from higher pipeline throughput volumes.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for MPLX this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. But that is not the case here as you will see below.  

Earnings ESP: The partnership’s Earnings ESP is -0.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MPLX currently carries a Zacks Rank #3.

Q4 Distribution Hike

MPLX recently announced that the board of directors has approved a hike in quarterly distribution payout. The distribution of 68.75 cents per common unit ($2.75 on an annualized basis) reflects 1.5% and 6.2% sequential and year-over-year hike, respectively. The increased distribution is likely to be paid on Feb 14 to unitholders of record as of Feb 4. Markedly, the latest increase marks the partnership’s 28th consecutive quarter of distribution hike.

Stocks That Warrant a Look

Though an earnings beat looks uncertain for MPLX, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:   

ConocoPhillips COP has an Earnings ESP of +2.45% and carries a Zacks Rank #2. The company is scheduled to release quarterly earnings on Feb 4. You can see the complete list of today’s Zacks #1 Rank stocks here

Antero Resources Corporation AR has an Earnings ESP of +52.44% and a Zacks Rank #3. The company is set to release quarterly earnings on Feb 12.

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Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report
 
MPLX LP (MPLX) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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