Marathon Petroleum (MPC): Assessing Valuation Following Recent Share Price Pullback

Marathon Petroleum (MPC) shares have been relatively steady over the past month, with a slight dip compared to recent highs. Investors may be weighing the company’s year-to-date climb of 28% as well as evolving sector dynamics.

See our latest analysis for Marathon Petroleum.

After a remarkable run-up earlier in the year, Marathon Petroleum’s recent share price pullback suggests the market is pausing to reassess the outlook amid changing sector winds. Momentum remains strong overall, with a year-to-date share price return of nearly 28% and a 12.7% total shareholder return over the past twelve months. Confidence in the company’s long-term performance appears resilient, especially given its sizable five-year total return.

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With strong historic returns and a recent pullback, the question now looms: does Marathon Petroleum remain undervalued by the market, or has its impressive growth potential already been fully priced in?

Most Popular Narrative: 4.4% Undervalued

Marathon Petroleum's most followed valuation view puts its fair value at $189.17, just above the last close of $180.89. All eyes are on whether upbeat refinery margins and sector tailwinds can keep up the pace.

Bullish analysts cite robust refining margins and strong margin capture, with recent quarters outperforming expectations and margin strength persisting despite calls for a decline.

Read the complete narrative.

Curious about what’s driving this positive valuation? It all revolves around anticipated margin improvements and bold profit projections, layered on top of controversial analyst growth assumptions. There is more to the story, so don’t miss what’s behind the fair value number.

Result: Fair Value of $189.17 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising electrification and tougher environmental policies could erode demand for refined fuels. This could put pressure on Marathon Petroleum’s future revenue and margins.

Find out about the key risks to this Marathon Petroleum narrative.

Another View: Peering Through the Earnings Lens

Looking at valuation through the lens of price-to-earnings, Marathon Petroleum trades at 25.8 times earnings. This is noticeably higher than the US Oil and Gas industry average of 13.4 times and also above the market-implied fair ratio of 21.2. This points to potential overvaluation based on earnings multiples. Could this premium signal risk if sentiment shifts?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Marathon Petroleum Narrative

For those who like to dig into the details firsthand or take a different perspective, you can craft your own view in just a few minutes using Do it your way.

A great starting point for your Marathon Petroleum research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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