On Tuesday, Marathon Petroleum (NYSE:MPC) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

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 over the past quarter and what we're likely to see in its quarterly report.

Stats on Marathon Petroleum

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$19.8 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

How can Marathon Petroleum keep growing this quarter?
Analysts have boosted their earnings estimates on Marathon Petroleum 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 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, Valero (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 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 (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.

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