Why Marathon Petroleum (MPC) Stock Is Down Today

NEW YORK (TheStreet) -- Marathon Petroleum (MPC) was falling 5.7% to $81.54 Wednesday after the U.S. government announced it will allow Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD) to export condensate that can be used for jet fuel or diesel.

The decision is expected to narrow the WTI-Brent spread, possibly leading to a drop in profits for oil refiners, according to Seeking Alpha. The change is the first loosening of a 40-year ban on U.S. crude exports.

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TheStreet Ratings team rates MARATHON PETROLEUM CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARATHON PETROLEUM CORP (MPC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that MPC's debt-to-equity ratio is low, the quick ratio, which is currently 0.70, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MARATHON PETROLEUM CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MARATHON PETROLEUM CORP reported lower earnings of $6.61 versus $9.91 in the prior year. This year, the market expects an improvement in earnings ($8.46 versus $6.61).
  • You can view the full analysis from the report here: MPC Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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