Stock of the Day

April 24, 2020

Marathon Petroleum (MPC)

$153.81
-$4.46 (-2.8%)
Market Cap: $50.87B

About Marathon Petroleum

Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. The company operates through Refining & Marketing, and Midstream segments. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States; and purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services. Its refined products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. This segment also manufactures propane and petrochemicals. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market, and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand. The Midstream segment transports, stores, distributes, and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats, and barges; gathers, processes, and transports natural gas; and gathers, transports, fractionates, stores, and markets natural gas liquids. Marathon Petroleum Corporation was founded in 1887 and is headquartered in Findlay, Ohio.

Marathon Petroleum Bull Case

Here are some ways that investors could benefit from investing in Marathon Petroleum Co.:

  • Marathon Petroleum Co. has announced a dividend of $0.91 per share, which translates to an annualized dividend of $3.64 and a yield of 2.33%. This consistent dividend payment can provide a steady income stream for investors.
  • The company has a relatively low payout ratio of 36.66%, indicating that it retains a significant portion of its earnings for reinvestment, which can support future growth and stability.
  • Marathon Petroleum Co. has initiated a stock buyback program worth $5.00 billion, allowing the company to repurchase up to 10% of its shares. This move often signals that the company's leadership believes its stock is undervalued, potentially leading to an increase in stock price.
  • Recent insider activity shows that Director Jeffrey C. Campbell purchased 6,000 shares at an average price of $149.61, reflecting confidence in the company's future performance. Insider buying can be a positive indicator for potential investors.
  • The current stock price of Marathon Petroleum Co. is approximately $149.61, which may be considered attractive given the company's strong fundamentals and growth prospects.

Marathon Petroleum Bear Case

Investors should be bearish about investing in Marathon Petroleum Co. for these reasons:

  • Despite the positive indicators, the oil and gas industry can be highly volatile, influenced by fluctuating oil prices and regulatory changes, which may impact Marathon Petroleum Co.'s profitability.
  • Insider ownership is relatively low at 0.21%, which may suggest a lack of alignment between management and shareholders' interests, potentially leading to decisions that do not prioritize shareholder value.
  • The company's significant stock buyback program, while a positive sign, could also indicate that management is not finding enough growth opportunities to invest in, which may limit long-term growth potential.
  • Marathon Petroleum Co. operates primarily in the United States, making it vulnerable to domestic economic fluctuations and changes in energy policy that could adversely affect its operations.
  • The company's focus on downstream operations may expose it to risks associated with refining margins, which can be affected by changes in supply and demand dynamics in the energy market.

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