Does the Recent 3% Drop Make MPLX a Hidden Opportunity for 2025?

Thinking about what to do with MPLX right now? You are not alone. With all the headlines around energy infrastructure, many investors are weighing their options. MPLX has certainly had a run, but what do those price moves really tell us, and more importantly, is the stock actually undervalued today?

Let us unpack what has been happening. While MPLX has dipped slightly over the past week (down 3.2%) and has pulled back by 2.5% in the last month, step back for a longer view and the numbers turn impressive. Year to date, MPLX is up 2.0%, and its one-year return is an eye-catching 20.0%. If you stretch that out further, MPLX has powered ahead by 105.9% over three years and a staggering 362.3% over five years. Some of those gains have been supported by broader optimism in infrastructure investments, as well as continued demand for stable pipeline assets.

But does the current price reflect MPLX's true value? According to our valuation checks, MPLX is undervalued in 5 out of 6 key categories, giving it a value score of 5. That is a strong signal, but not the whole story. In the next section, we will break down these valuation checks one by one, and later on, I will share an even better way to look at what the market is really saying about MPLX’s value today.

MPLX delivered 20.0% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: MPLX Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the value of a business by projecting its future cash flows and discounting them back to today's value. This approach helps investors understand what a company might really be worth, regardless of the latest market sentiment.

For MPLX, current Free Cash Flow stands at $5.01 billion. Analyst estimates project this figure will continue to climb in the coming years, reaching $5.4 billion by 2029. For projections beyond five years, Simply Wall St applies a gradual growth assumption and puts free cash flow at nearly $6.7 billion by 2035. All of these cash flows are measured in US dollars. These forward-looking figures are crucial for assessing long-term value using this model.

Based on these cash flow projections, the DCF model calculates an intrinsic value of $116.44 per share for MPLX. This suggests the stock is currently trading at a 57.4% discount to its intrinsic value, which may indicate significant undervaluation in the market.

This analysis supports the idea that MPLX could be an opportunity for investors seeking value.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for MPLX.

Our Discounted Cash Flow (DCF) analysis suggests MPLX is undervalued by 57.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: MPLX Price vs Earnings

The Price-to-Earnings (PE) ratio is a favored valuation method for established, profitable companies like MPLX. It gives a quick sense of how much investors are willing to pay for each dollar of a company’s earnings today. This makes it a useful way to compare value across similar businesses.

Growth prospects and perceived risk both have a big impact on what a “normal” or “fair” PE ratio should be. Companies expected to grow quickly or with more stable earnings often command higher PE ratios, while those facing risks or slowdowns tend to trade at lower multiples.

MPLX currently trades at a PE ratio of 11.8x. This comes in below the oil and gas industry average of 13.4x, and is even further below the average for peer companies, which stands at 15.7x. At first glance, that looks like a bargain, but benchmarks do not always tell the full story.

Simply Wall St’s “Fair Ratio” for MPLX is calculated at 19.1x. This proprietary metric weighs important factors such as MPLX’s earnings growth, industry backdrop, profit margins, market size, and specific risks to the business. By accounting for company-specific characteristics, the Fair Ratio paints a more accurate picture than simple peer or industry averages.

Since MPLX’s current PE ratio (11.8x) is well below its Fair Ratio (19.1x), the stock appears meaningfully undervalued by this approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your MPLX Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is the story you build around a company by combining your own perspective on its future with the numbers behind its financial forecast and your idea of fair value. Narratives help you connect the dots between what you believe about a company, such as its growth, industry shifts, and competitive edge, and the actual data like expected revenue, margins, and what the stock should be worth.

On Simply Wall St’s Community page, Narratives are an easy-to-use tool, already available to millions of investors, that makes this process accessible for anyone. By creating or following a Narrative, you can see how your assumptions compare to others, quickly spot if the current price offers a buying or selling opportunity, and receive automatic updates whenever new earnings or major news events are released. This means your Narrative always reflects the latest information and market outlook.

For example, with MPLX right now, some investors see strong infrastructure growth and set fair value at $64, while others worry more about risk and set it closer to $51. The Narrative you choose helps you decide what price makes sense for you to buy, hold, or sell.

Do you think there's more to the story for MPLX? Create your own Narrative to let the Community know!

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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