Marathon Petroleum (NYSE:MPC) shareholder returns have been fantastic, earning 456% in 3 years - Simply Wall St

Marathon Petroleum (NYSE:MPC) shareholder returns have been fantastic, earning 456% in 3 years - Simply Wall St News

Stock Analysis

United States
- /
Oil and Gas
- /
- NYSE:MPC

Marathon Petroleum (NYSE:MPC) shareholder returns have been fantastic, earning 456% in 3 years

For us, stock picking is in large part the hunt for the truly magnificent stocks. But when you hold the right stock for the right time period, the rewards can be truly huge. One bright shining star stock has been Marathon Petroleum Corporation ( NYSE:MPC), which is 405% higher than three years ago. On top of that, the share price is up 25% in about a quarter.

Since the stock has added US$2.0b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Marathon Petroleum

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During three years of share price growth, Marathon Petroleum moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Marathon Petroleum has grown profits over the years, but the future is more important for shareholders. This free interactive report on Marathon Petroleum's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Marathon Petroleum the TSR over the last 3 years was 456%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Marathon Petroleum has rewarded shareholders with a total shareholder return of 46% in the last twelve months. And that does include the dividend. That's better than the annualised return of 19% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Marathon Petroleum better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Marathon Petroleum (at least 1 which is potentially serious), and understanding them should be part of your investment process.

But note: Marathon Petroleum may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Marathon Petroleum is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
View the Free Analysis

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

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.

About NYSE:MPC

Marathon Petroleum

Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States.

Outstanding track record established dividend payer.

Similar Companies

Market Insights

Stock Analysis
Oceaneering International (NYSE:OII) shareholder returns have been fantastic, earning 553% in 3 years Investors in Allot (NASDAQ:ALLT) from three years ago are still down 79%, even after 11% gain this past week