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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Marathon Petroleum (MPC). MPC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors will also notice that MPC has a PEG ratio of 0.26. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MPC's industry currently sports an average PEG of 0.50. MPC's PEG has been as high as 1.23 and as low as 0.19, with a median of 0.34, all within the past year.
We should also highlight that MPC has a P/B ratio of 1.71. 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. MPC's current P/B looks attractive when compared to its industry's average P/B of 2.08. Over the past 12 months, MPC's P/B has been as high as 2.03 and as low as 1.21, with a median of 1.56.
Finally, investors will want to recognize that MPC has a P/CF ratio of 3.88. 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 4.61. Over the past year, MPC's P/CF has been as high as 4.93 and as low as 3.21, with a median of 3.80.
Another great Oil and Gas - Refining and Marketing stock you could consider is Par Pacific (PARR), which is a # 2 (Buy) stock with a Value Score of A.
Par Pacific also has a P/B ratio of 2.91 compared to its industry's price-to-book ratio of 2.08. Over the past year, its P/B ratio has been as high as 9.70, as low as 1.81, with a median of 3.30.
Value investors will likely look at more than just these metrics, but the above data helps show that Marathon Petroleum and Par Pacific are likely undervalued currently. And when considering the strength of its earnings outlook, MPC and PARR sticks out as one of the market's strongest value stocks.
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