Yahoo Finance Is It Too Late To Buy Marathon Petroleum Corporation (NYSE:MPC)?
Let’s talk about the popular Marathon Petroleum Corporation (NYSE:MPC). The company’s shares received a lot of attention from a substantial price increase on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Marathon Petroleum’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Marathon Petroleum
What is Marathon Petroleum worth?
According to my valuation model, Marathon Petroleum seems to be fairly priced at around 11% above my intrinsic value, which means if you buy Marathon Petroleum today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $73.89, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Marathon Petroleum’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Marathon Petroleum generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Marathon Petroleum, at least in the near future.
What this means for you:
Are you a shareholder? Currently, MPC appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MPC for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on MPC should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Marathon Petroleum. You can find everything you need to know about Marathon Petroleum in the latest infographic research report. If you are no longer interested in Marathon Petroleum, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
