Here's How Much a $1000 Investment in Marathon Petroleum Made 10 Years Ago Would Be Worth Today
How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Marathon Petroleum (MPC) ten years ago? It may not have been easy to hold on to MPC for all that time, but if you did, how much would your investment be worth today?
Marathon Petroleum's Business In-Depth
With that in mind, let's take a look at Marathon Petroleum's main business drivers.
Findlay, OH-based Marathon Petroleum Corporation is a leading independent refiner, transporter and marketer of petroleum products. The company, in its current form, came into existence following the 2011 spin-off of Houston, TX-based Marathon Oil Corporation’s refining/sales business into a separate, independent and publicly-traded entity. In October 2018, Marathon Oil completed the acquisition of its rival Andeavor in a $23.3 billion deal, thereby becoming the nationwide largest refining company by market capitalization. The deal also made the company the largest U.S. refiner and the fifth largest in the world by capacity.
Marathon Petroleum operates in two segments: Refining and Marketing and Pipeline Transportation.
Refining and Marketing: The unit’s operations include 16 refineries, located in the West Coast, Gulf Coast and the Mid-Continent regions of the United States, having a combined crude processing capacity of more than 3 million barrels per day. Additionally, Marathon Petroleum – through its marketing organization – sells transportation fuels, asphalt and specialty products throughout the country to support commercial, industrial and retail operations. In 2021, the Refining & Marketing segment recorded a profit of $1 billion.
Midstream: This unit mainly reflects Marathon Petroleum’s general partner and majority limited partner interests in MPLX LP and Andeavor Logistics LP - publicly-traded master limited partnerships that own and operate gathering and processing assets along with crude transportation and logistics infrastructure. Marathon Petroleum owns 63.6% each of MPLX’s and ANDX’s common units. The 'Midstream' segment reported total earnings of $4.1 billion in 2021.
Last year, Marathon Petroleum sold its Speedway business to Japanese retail group Seven & i Holdings – owner of the 7-Eleven convenience store chain – for $21 billion.
As of Dec 31, the company had cash and cash equivalents of $5.3 billion and a total debt, including that of MPLX, of $25.5 billion.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Marathon Petroleum, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in March 2012 would be worth $3,657.27, or a 265.73% gain, as of March 24, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 218.96% and the price of gold increased 12.55% over the same time frame in comparison.
Going forward, analysts are expecting more upside for MPC.
Marathon Petroleum shares have outperformed the Zacks Oil Refining & Marketing industry in a year (+41.3% versus +16.9%) and is poised for further price gains based on a slew of tailwinds. One of the largest oil refiners in the United States, Marathon’s $21 billion sale of its Speedway retail business provided the company with a much-needed cash infusion. The deal also comes with a 15-year fuel supply agreement per which Marathon will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream. The company’s exposure to the more stable cash flows from logistics segment diversifies earnings stream and offers a buffer against the volatile refining business. Consequently, Marathon is primed for significant capital appreciation and is viewed a preferred downstream operator to own now.
The stock is up 6.26% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 6 higher, for fiscal 2022. The consensus estimate has moved up as well.
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