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Marathon Petroleum: A Strong Buy

Zacks Equity Research

On Mar 13, Zacks Investment Research upgraded independent oil refiner and marketer Marathon Petroleum Corporation (MPC) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Operating environment and future growth prospects seem bright for Marathon Petroleum, as earnings estimates for this Ohio-based company are on the rise. Over the last 30 days, the Zacks Consensus Estimate for first quarter of 2013 has increased 7.34% to $1.90 per share, while that for 2013 went up 11.75% to $10.84 per share.

Momentum has been strong since Marathon Petroleum released its fourth quarter and year 2012 earnings results on Jan 30. Earnings per share (adjusted for special items) of $2.26 for the reported quarter were ahead of the Zacks Consensus Estimate of $2.09.

Revenues of $20.7 billion were up 6.5% year over year and surpassed the Zacks Consensus Estimate of $20.2 billion. Better-than-expected fourth quarter 2012 profits were attributable to favorable market conditions and increased earnings in all its segments.

Apart from delivering positive earnings surprises in three of the last four quarters with an average beat of 10.55%, the company also boasts an impressive long-term expected earnings growth rate of 7.01%.

Additionally, for its fiscal year ended Dec 31, 2012, Marathon Petroleum returned about $1.76 billion to shareholders by way of dividend and share repurchase programs. The board of directors also increased outstanding share repurchases authorization to $2.65 billion.

Moreover, the company possesses one of the healthiest balance sheets among peers and a robust free cash flow generating ability. The ongoing buyback program highlights Marathon Petroleum’s commitment to create value for shareholders.

Other Stocks to Consider

Other stocks worth a look in the industry are Calumet Specialty Products Partners L.P. (CLMT) and Lehigh Gas Partners LP (LGP), each with a Zacks Rank #1 (Strong Buy) and Phillips 66 (PSX) , carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on PSX

Read the Full Research Report on LGP

Read the Full Research Report on MPC

Read the Full Research Report on CLMT

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