Have you been paying attention to shares of Marathon Petroleum (MPC)? Shares have been on the move with the stock up 15% over the past month. The stock hit a new 52-week high of $98.95 in the previous session. Marathon Petroleum has gained 51.5% since the start of the year compared to the 34.2% move for the Zacks Oils-Energy sector and the 32.8% return for the Zacks Oil and Gas - Refining and Marketing industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 3, 2022, Marathon Petroleum reported EPS of $1.49 versus consensus estimate of $1.12 while it beat the consensus revenue estimate by 37.53%.
For the current fiscal year, Marathon Petroleum is expected to post earnings of $10.17 per share on $131.8 billion in revenues. This represents a 315.1% change in EPS on an 8.99% change in revenues. For the next fiscal year, the company is expected to earn $7.99 per share on $121.32 billion in revenues. This represents a year-over-year change of -21.38% and -7.95%, respectively.
Marathon Petroleum may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Marathon Petroleum has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 9.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 9.5X. On a trailing cash flow basis, the stock currently trades at 11.9X versus its peer group's average of 9.7X. Additionally, the stock has a PEG ratio of 0.51. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Marathon Petroleum currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Marathon Petroleum fits the bill. Thus, it seems as though Marathon Petroleum shares could have potential in the weeks and months to come.
How Does MPC Stack Up to the Competition?
Shares of MPC have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is PBF Energy Inc. (PBF). PBF has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. PBF Energy Inc. beat our consensus estimate by 34.62%, and for the current fiscal year, PBF is expected to post earnings of $5.77 per share on revenue of $37.18 billion.
Shares of PBF Energy Inc. have gained 18.1% over the past month, and currently trade at a forward P/E of 5.28X and a P/CF of 20.18X.
The Oil and Gas - Refining and Marketing industry is in the top 9% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MPC and PBF, even beyond their own solid fundamental situation.
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