Should Value Investors Buy Marathon Petroleum (MPC) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Marathon Petroleum (MPC). MPC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another notable valuation metric for MPC is its P/B ratio of 1.61. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.83. Within the past 52 weeks, MPC's P/B has been as high as 2.03 and as low as 0.97, with a median of 1.41.
Finally, we should also recognize that MPC has a P/CF ratio of 3.60. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.26. Over the past year, MPC's P/CF has been as high as 4.54 and as low as 2.96, with a median of 3.44.
Another great Oil and Gas - Refining and Marketing stock you could consider is Phillips 66 (PSX), which is a # 2 (Buy) stock with a Value Score of A.
Phillips 66 is currently trading with a Forward P/E ratio of 6.70 while its PEG ratio sits at 0.58. Both of the company's metrics compare favorably to its industry's average P/E of 5.30 and average PEG ratio of 0.19.
PSX's price-to-earnings ratio has been as high as 19.08 and as low as 6.70, with a median of 10.96, while its PEG ratio has been as high as 2.40 and as low as 0.50, with a median of 0.70, all within the past year.
Additionally, Phillips 66 has a P/B ratio of 1.80 while its industry's price-to-book ratio sits at 1.83. For PSX, this valuation metric has been as high as 2.40, as low as 1.37, with a median of 1.71 over the past year.
These are just a handful of the figures considered in Marathon Petroleum and Phillips 66's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MPC and PSX is an impressive value stock right now.
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