Earnings Previews: CVS, GM, Marathon, Royal Caribbean

Marathon Petroleum

The country’s largest oil refiner, Marathon Petroleum Corp. (NYSE: MPC), has seen its share price rise by nearly 50% over the past 12 months. For the year to date, the stock has added about 34%. Rising oil prices are generally a drag on refining margins and earnings, and that trend has not escaped the notice of analysts who see Marathon’s revenues flattening or even declining for the rest of the year.

Even so, of 16 brokerages covering Marathon, 12 rate the shares a Buy or Strong Buy, and the rest recommend holding the stock. At a trading price of around $54.40, the stock’s upside potential based on a median price target of $70 is about 29%. At the high target of $83, upside potential is nearly 53%.

Quarterly revenue is forecast at $21.24 billion, down more than 7% sequentially, but up by about 46% year over year. In the same quarter last year, Marathon posted an adjusted loss per share of $1.33. For the second quarter of 2021, analysts are looking for EPS of $0.38. For the full year, the consensus estimates call for EPS of $0.88, compared to a 2020 loss per share of $3.44. Revenue is forecast to rise by 26.5% to $87.32 billion.

Marathon’s stock trades at 60.8 times expected 2021 EPS, 16.6 times estimated 2022 earnings and 12.7 times estimated 2023 earnings. The stock’s 52-week range is $26.56 to $64.84. Marathon pays an annual dividend of $2.32 (yield of 4.2%).

Royal Caribbean

The cruise line industry was hit especially hard by the COVID-19 pandemic. Since January of 2020, Royal Caribbean Group (NYSE: RCL) has seen its share price tumble by 42%. That decline includes a share price increase of around 57% over the past 12 months but a gain of just 2.6% for the year to date. That yearly gain comes after spikes of around 30% in the share price as hopes rose that vaccinations would bring vacationers back.

Last week, six passengers on one of the company’s ships tested positive for coronavirus, which didn’t help, but Royal Caribbean and other cruise lines already had been struggling with the fallout from the Delta variant of the virus.

Analysts have remained moderately bullish on Royal Caribbean stock, with eight of 18 brokerages putting a rating of Buy or Strong Buy on the stock. Another four rate the shares Sell or Strong Sell. At a trading price of around $76.60, the stock’s implied upside to a median price target of $93.50 is 22%. At the high price target of $135, upside potential jumps to 76%.

Second-quarter revenue is forecast at$14.36 million, up about 234% sequentially, but down about 20% year over year. The company is expected to report a loss per share of $4.38, six cents better sequentially, and $1.75 better than the per-share loss in the second quarter of last year. For the full year, Royal Caribbean is expected to post a loss per share of $13.55, compared to a loss per share of $18.31 last year. Revenue is forecast to improve by 11.7% to $2.47 billion.

The stock trades at 44.1 times estimated 2022 earnings and 11.7 times estimated 2023 earnings. The stock’s 52-week range is  $45.71 to $99.24. The company has suspended its dividend.

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