Marathon Petroleum Profits Take Near-Term Hit from Refinery Issues and Lower Margins, But Long-Term Outlook Still Strong
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Marathon Petroleum is a large and efficient refiner well-positioned to generate strong profits if market conditions are favorable. However, results can vary widely based on macro factors like crack spreads.
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Marathon recently reported very strong Q3 2022 results, but Q4 is expected to be weaker due to unplanned refinery outages and a 40% drop in key crack spreads.
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Marathon pays a dividend supported by the cash flow from its MLP subsidiary MPLX. This cash flow covers the dividend and over half of capital expenditures.
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New global refining capacity coming online 2024-2029 may pressure margins over the long term. But Marathon's dividend appears secure due to MPLX.
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With crack spreads still weak, Marathon's stock may tread water until the Q4 earnings report on January 30 provides more clarity. The company remains well-managed but faces some near-term headwinds.