Is Marathon Petroleum (MPC) Pricing Reflect Long Term Value After Recent Share Pullback

• If you are wondering whether Marathon Petroleum’s current share price still offers value, you are not alone. This article is going to walk through what that price actually implies.
• The stock last closed at US$172.54, with returns of a 1.8% decline over 7 days, 5.4% over 30 days, 4.5% year to date and 15.6% over 1 year, alongside a very large gain over 5 years.
• Recent headlines around Marathon Petroleum have largely focused on its position in the US energy sector and broader discussions about refining capacity and fuel markets, which often influence how investors think about future cash flows and risk. This backdrop helps explain why the share price can shift over shorter periods even when the long term story feels steady.
• Simply Wall St currently assigns Marathon Petroleum a valuation score of 4/6, based on how many of six checks suggest the stock is undervalued. Next we will look at how different valuation methods arrive at that view, while hinting at an even richer way to think about value at the end of the article.

Marathon Petroleum delivered 15.6% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Marathon Petroleum Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash Marathon Petroleum is expected to generate in the future, and then discounts those amounts back to today to estimate what the business might be worth right now.

For Marathon Petroleum, the model uses last twelve months free cash flow of about $5.1b and a 2 Stage Free Cash Flow to Equity approach. Analysts provide explicit free cash flow estimates out to 2027, with Simply Wall St extrapolating the later years. By 2035, the projection in the model reaches around $7.5b, with each future year discounted to reflect risk and the time value of money.

When all those discounted cash flows are added together and divided by the number of shares, the DCF output suggests an intrinsic value of about $457.73 per share. Compared with the recent share price of US$172.54, the model implies the stock is 62.3% undervalued on this set of assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Marathon Petroleum is undervalued by 62.3%. Track this in your watchlist or portfolio, or discover 886 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Marathon Petroleum.

Approach 2: Marathon Petroleum Price vs Earnings

For a profitable company like Marathon Petroleum, the P/E ratio is a straightforward way to link what you pay today to the earnings the business is already generating. Investors usually accept a higher or lower P/E depending on what they expect for future earnings growth and how much risk they see in those earnings.

Marathon Petroleum currently trades on a P/E of 18.02x. That sits above the Oil and Gas industry average of 13.55x, but below the peer average of 31.37x. Simply Wall St also calculates a “Fair Ratio” of 21.00x, which is the P/E level that its model suggests could be reasonable given factors such as earnings growth, profit margins, industry, market cap and specific risks.

This Fair Ratio is more tailored than a simple comparison with industry or peer averages, because it adjusts for the company’s own characteristics rather than assuming all refiners or energy stocks should trade at the same multiple. With Marathon Petroleum’s current P/E of 18.02x below the Fair Ratio of 21.00x, the multiple based view points toward the shares trading at a discount on these inputs.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1425 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Marathon Petroleum Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about Marathon Petroleum, paired with your own view of its future revenue, earnings and margins, and the fair value that falls out of that story.

A Narrative connects what you believe about the business to a forecast of its financials, and then to a single fair value estimate that you can compare directly with the current share price to decide whether the stock looks expensive or cheap on your terms.

On Simply Wall St, millions of investors share these Narratives on the Community page, and the platform keeps each one up to date as new information such as earnings releases or major news flows through, so your story and fair value stay aligned with the latest data without extra effort from you.

For example, one Marathon Petroleum Narrative might assume more cautious long term margins and arrive at a relatively low fair value, while another Narrative might assume stronger refining economics and assign a much higher fair value, giving you a clear sense of how different viewpoints translate into different numbers.

Do you think there’s more to the story for Marathon Petroleum? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com