Marathon Petroleum Corporation (MPC) primarily operates as an integrated downstream energy company in the United States. The company operates in two segments: Refining & Marketing and Midstream. It refines crude oil and other feedstocks and purchases refined products and ethanol for resale. Also, it transports, distributes, and markets crude oil, natural gas, and refined products.

The company operates more than 7,160 jobber outlets in 37 states, the District of Columbia, and Mexico through independent entrepreneurs.

MPC reported impressive second-quarter results. Moreover, the company accomplished a lot during the quarter. “Our team delivered on supplying products to meet strong market demand. Utilizing the proceeds from the Speedway divestiture, we have completed approximately $12 billion of our $15 billion return of the capital program,” said Michael J. Hennigan, MPC’s president and CEO.

“We also recently published our annual Sustainability and Climate reports, highlighting the progress we have made across our sustainability commitments,” he added.

MPC has gained 53.5% year-to-date and 79.1% over the past year to close the last trading session at $100.79. The stock is currently trading just 11.9% below its 52-week high of $114.35, which it hit on June 8, 2022.

Here is what could influence MPC’s performance in the upcoming months:

Robust Financials

MPC’s revenues and other income increased 81.8% year-over-year to $54.24 billion in the fiscal 2022 second quarter ended June 30, 2022. The company's income from continuing operations, net of tax, amounted to $6.22 billion, up 957.3% year-over-year.

Furthermore, the company’s net income per share from continuing operations came in at $10.95, registering an increase of 2,333.3% from the prior-year period. And as of June 30, 2022, MPC has $13.30 billion of cash, cash equivalents, and short-term investments and $5 billion available on its bank revolving credit facility.

Favorable Analyst Estimates

Analysts expect MPC’s revenue for the fiscal 2022 third quarter (ending September 2022) to come in at $39.51 billion, representing an increase of 21.1% from the same period in 2021. The current quarter's $5.46 consensus EPS estimate indicates a 647.7% year-over-year increase. The company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

In addition, the consensus revenue estimate of $170.78 billion for the fiscal year 2022 (ending December 2022) represents a growth of 41.2% from the previous year. The consensus EPS estimate of $20.20 for the ongoing year indicates a 724.6% year-over-year rise. Furthermore, Wall Street analysts expect the stock to hit $118.10 in the near term, indicating a potential upside of 17.2%.

High Profitability

MPC's trailing-12-month gross asset turnover ratio of 1.68% is 186.8% higher than the 0.58% industry average. Its trailing-12-month ROCE of 29.64% is 90.9% higher than the 15.53% industry average. Likewise, the stock's trailing-12-month ROTC and ROTA of 12.23% and 8.46% are higher than the industry averages of 6.43% and 5.57%, respectively.

Discounted Valuation

In terms of forward non-GAAP P/E, MPC’s 4.88x is 30.7% lower than the 7.04x industry average. The stock’s 3.57x forward EV/EBITDA is 36.9% lower than the 5.66x industry average. Also, its forward Price/Sales multiple of 0.29 compares with the industry average of 1.39.

In addition, MPC’s 3.47x forward Price/Cash Flow is 13% lower than the 3.99x industry average.

Power Ratings Show Promise

MPC's overall A rating equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

MPC has a grade of A for Growth, consistent with its revenue and earnings growth estimates. The stock also has a grade of A for Quality, in sync with its higher-than-industry profitability multiples.

MPC is ranked #7 out of 97 stocks in the B-rated Energy-Oil & Gas industry.

Beyond what I have stated above, we have also given MPC grades for Sentiment, Momentum, Value, and Stability. Get access to all the MPC ratings here.

Bottom Line

MPC reported solid fiscal 2022 second-quarter results. And the company is expected to maintain a focus on cost containment and improve commercial performance. Moreover, the stock is currently trading above its 50-day and 200-day moving averages of $90.78 and $81.03, respectively, indicating an uptrend.

Given the company’s robust financials, higher-than-industry profitability, low valuation, and solid revenue and earnings growth estimates, we think it could be wise to invest in the stock now.

How Does Marathon Petroleum Corp. (MPC) Stack Up Against its Peers?

MPC has an overall POWR Rating of A. One could also check out these other stocks within the Energy-Oil & Gas industry with an A (Strong Buy) rating: Whitecap Resources, Inc. (SPGYF), Valero Energy Corp. (VLO), and Epsilon Energy Ltd. (EPSN).

MPC shares were trading at $101.09 per share on Friday afternoon, up $0.30 (+0.30%). Year-to-date, MPC has gained 61.08%, versus a -10.23% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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