Marathon Petroleum (MPC, Financial) recently reported a daily gain of 2.14%, with a 3-month gain of 35.81%. The company's Earnings Per Share (EPS) (EPS) stands at 27.56. However, the question that remains is whether the stock is modestly overvalued. This article presents a comprehensive valuation analysis of Marathon Petroleum to provide insights into its intrinsic value.
Marathon Petroleum Corp (MPC, Financial) is an independent refiner operating 13 refineries across the midcontinent, West Coast, and Gulf Coast of the United States. With a total throughput capacity of 2.9 million barrels per day, the company has a significant presence in the Oil & Gas industry. The company's stock price currently stands at $157.1, compared to its GF Value of $134.88, indicating a modest overvaluation. This article delves into the details of Marathon Petroleum's value, intertwining financial assessment with key company details.
Understanding GF Value
The GF Value of Marathon Petroleum represents the current intrinsic value of the stock as calculated using our unique methodology. This value is derived from historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
Marathon Petroleum's stock is estimated to be modestly overvalued based on our GF Value calculation. This suggests that the long-term return of its stock is likely to be lower than its business growth.
Financial Strength Assessment
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Marathon Petroleum has a cash-to-debt ratio of 0.4, ranking worse than 55.31% of 1027 companies in the Oil & Gas industry. GuruFocus ranks Marathon Petroleum's financial strength as 7 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. Marathon Petroleum has been profitable 9 out of the past 10 years, boasting an operating margin of 10.44%, which ranks better than 53.79% of 976 companies in the Oil & Gas industry.
Looking at growth, Marathon Petroleum's 3-year average annual revenue growth rate is 27.1%, ranking better than 80.63% of 857 companies in the Oil & Gas industry. Its 3-year average EBITDA growth rate is 60.9%, ranking better than 87.76% of 825 companies in the industry.
ROIC vs WACC
A comparison of a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) offers another way to evaluate its profitability. Marathon Petroleum's ROIC over the past 12 months was 21.62, while its WACC came in at 8.55, indicating value creation for shareholders.
In conclusion, Marathon Petroleum's stock is estimated to be modestly overvalued. The company's financial condition is fair, and its profitability is also fair. Its growth ranks better than 87.76% of 825 companies in the Oil & Gas industry. To learn more about Marathon Petroleum stock, you can check out its 30-Year Financials here.
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