Marathon Petroleum Corp Stock Hold Recommendation Reiterated (MPC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Marathon Petroleum (NYSE: MPC) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

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Highlights from the ratings report include:
  • When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARATHON PETROLEUM CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The revenue growth came in higher than the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MPC's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • MARATHON PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MARATHON PETROLEUM CORP increased its bottom line by earning $9.91 versus $5.19 in the prior year. For the next year, the market is expecting a contraction of 0.6% in earnings ($9.85 versus $9.91).
  • The gross profit margin for MARATHON PETROLEUM CORP is currently extremely low, coming in at 9.00%. Regardless of MPC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.92% trails the industry average.

Marathon Petroleum Corporation, together with its subsidiaries, engages in refining, transporting, and marketing petroleum products primarily in the United States. Marathon has a market cap of $27.44 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 8.3, below the S&P 500 P/E ratio of 17.7. Shares are up 28.4% year to date as of the close of trading on Wednesday.

You can view the full Marathon Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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