How Does Marathon Petroleum’s Valuation Look?



Marathon Petroleum’s valuations

Currently, Marathon Petroleum (MPC) trades at a forward PE ratio of 7.6x, which is below its peer average of 8.4x. Valero Energy (VLO) and Phillips 66 (PSX) trade above the peer average. Valero Energy and Phillips 66 stock trade at 8.9x and 9.8x the forward PE ratio, respectively.

Marathon Petroleum stock trades at a forward EV-to-EBITDA multiple of 5.9, which is above its peer average of 5.4x. However, HollyFrontier (HFC), PBF Energy (PBF), and Delek US Holdings (DK) trade below the peer average EV-to-EBITDA multiple at 5.2x, 4.6x, and 4.8x, respectively.

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Why does Marathon Petroleum have mixed valuations?

Marathon Petroleum stock shows a mixed trend. While the stock’s EV-to-EBITDA multiple trades above the peer average, its forward PE ratio trades below the average—possibly due to the better long-term earnings outlook and the company’s weak financials.

Marathon Petroleum’s earnings are estimated to grow due to its integrated model and high capacities. The anticipated synergies from Andeavor’s acquisition are expected to increase the earnings. The company’s capex activities in the refining and midstream segments could fuel the earnings growth. Analysts expect the company’s earnings to grow in the next year. Marathon Petroleum’s EPS is expected to rise 67% in 2020.

In 2019, Marathon Petroleum’s earnings are expected to fall 20%. On average, peers’ earnings are estimated to fall 24% in 2019. Marathon Petroleum’s debt position isn’t comfortable. These factors could have impacted Marathon Petroleum’s valuations.


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