Marathon Petroleum (MPC) Roof Leaking Today

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.

Trade-Ideas LLC identified Marathon Petroleum ( MPC) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Marathon Petroleum as such a stock due to the following factors:

  • MPC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $286.9 million.
  • MPC has traded 2.1 million shares today.
  • MPC is trading at 5.34 times the normal volume for the stock at this time of day.
  • MPC crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on MPC:

Marathon Petroleum Corporation, together with its subsidiaries, is engaged in refining, transporting, and marketing petroleum products primarily in the United States. It operates through three segments: Refining & Marketing, Speedway, and Pipeline Transportation. The stock currently has a dividend yield of 2.1%. MPC has a PE ratio of 12.1. Currently there are 10 analysts that rate Marathon Petroleum a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Marathon Petroleum has been 3.5 million shares per day over the past 30 days. Marathon has a market cap of $27.1 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.87 and a short float of 2.7% with 2.10 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Friday.

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

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Marathon Petroleum as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 300.0% when compared to the same quarter one year prior, rising from $168.00 million to $672.00 million.
  • Net operating cash flow has significantly increased by 164.86% to $1,078.00 million when compared to the same quarter last year. In addition, MARATHON PETROLEUM CORP has also vastly surpassed the industry average cash flow growth rate of -1.72%.
  • The current debt-to-equity ratio, 0.58, 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 0.69, displays a potential problem in covering short-term cash needs.

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

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