Briefing From The Editor -- MPC Stock

Now trading at a price of $140.03, Marathon Petroleum has moved 1.5% so far today.

Marathon Petroleum returned gains of 58.0% last year, with its stock price reaching a high of $141.7 and a low of $89.4. Over the same period, the stock outperformed the S&P 500 index by 48.0%. More recently, the company's 50-day average price was $117.92. Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. Based in Findlay, OH, the large-cap Energy company has 17,800 full time employees. Marathon Petroleum has offered a 2.2% dividend yield over the last 12 months.

The Business Has Weak Operating Margins:

2020-02-28 2021-02-26 2022-02-24 2023-02-23
Revenue (MM) $111,148 $69,897 $120,451 $178,236
Gross Margins 10.7% 6.0% 8.7% 14.9%
Operating Margins 4.4% -3.7% 3.2% 11.1%
Net Margins 2.37% -14.06% 8.08% 8.14%
Net Income (MM) $2,637 -$9,826 $9,738 $14,516
Net Interest Expense (MM) -$1,229 -$1,365 -$1,483 -$1,000
Depreciation & Amort. (MM) -$3,225 -$3,375 -$3,364 -$3,215
Earnings Per Share $3.97 -$15.14 $15.99 $32.58
EPS Growth n/a -481.36% 205.61% 103.75%
Diluted Shares (MM) 664 649 609 430
Free Cash Flow (MM) $14,204 $5,056 $5,671 $18,691
Capital Expenditures (MM) -$4,763 -$2,637 -$1,311 -$2,330
Net Current Assets (MM) -$24,991 -$26,651 -$21,296 -$19,575
Current Ratio 1.8 1.81 1.7 1.76
Long Term Debt (MM) $28,020 $28,730 $24,968 $25,634
Net Debt / EBITDA 4.33 -11.74 1.41 1.27

Marathon Petroleum has exceptional EPS growth and growing revenues and decreasing reinvestment in the business. Additionally, the company's financial statements display generally positive cash flows and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a positive growth rate. Finally, we note that Marathon Petroleum has a decent current ratio.

A Very Low P/E Ratio but Trades Above Its Graham Number:

Marathon Petroleum has a trailing twelve month P/E ratio of 3.6, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $13.2, the company has a forward P/E ratio of 8.9. According to the 27.2% compound average growth rate of Marathon Petroleum's historical and projected earnings per share, the company's PEG ratio is 0.13. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.7%. On this basis, the company's PEG ratio is 0.34. This suggests that its shares are undervalued. In contrast, Marathon Petroleum is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.21 is higher than the sector average of 1.68. The company's shares are currently trading 21.2% above their Graham number.

Marathon Petroleum Has an Average Rating of Buy:

The 15 analysts following Marathon Petroleum have set target prices ranging from $132.0 to $165.0 per share, for an average of $147.33 with a buy rating. As of April 2023, the company is trading -20.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Marathon Petroleum has an average amount of shares sold short because 2.6% of the company's shares are sold short. Institutions own 78.5% of the company's shares, and the insider ownership rate stands at 0.2%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $5,949,022,339.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.