Why Marathon Petroleum Stock Has Rallied Despite Falling Oil Prices

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Marathon Petroleum Corporation (NYSE: MPC) is the largest petroleum refinery operator in the United States. Its businesses include petroleum refining, marketing, and transportation. The stock has surged almost 20% over the last month, after activist hedge fund Elliott Management, which holds a ~2.5% stake in Marathon, announced that it would seek to split the company into three units – spinning off the Speedway gas-station business and pipeline operations into separate companies, while leaving the core refining operations as the new Marathon. Elliott’s solid track record and the potential shareholder value that such a move would create are likely to have increased investor interest in the stock, which has underperformed this year as volatile crude oil prices created headwinds for its refining operations. Below, we provide an overview of how Marathon has fared over the last few years and the outlook for the company.

View our interactive dashboard analysis on Why Marathon Petroleum Corporation Is Up 20% Over The Last Month?

How does Marathon Petroleum’s Revenue Growth in 2018 compare with that in prior periods and what’s the forecast?

Total Revenues for Marathon Petroleum increased from $74 Bil in 2017 to $95.8 Bil in 2018 an increase of 29%, driven partly by its October 2018 acquisition of Andeavor, an independent refinery and oil company.

This compares with Total Revenue growth of:

  • -26% in 2015 compared to 2014
  • -12% in 2016 compared to 2015
  • 17% in 2017 compared to 2016

We expect Total Revenues growth to be 36% in 2019, driven by higher refined product sales volumes and the full-year impact of the Andeavor deal.

How does Marathon Petroleum’s Total Expense in 2018 compare with that in prior periods and what’s the forecast?

Total Expense for Marathon Petroleum increased from $70.8 Bil in 2017 to $91.2 Bil in 2018; an increase of 28.9%.

This compares with Total Expense growth of:

  • -28.6% in 2015 compared to 2014
  • -9.2% in 2016 compared to 2015
  • 15.1% in 2017 compared to 2016

We expect Total Expense growth to be 39% in 2019, due to the acquisition of Andeavor.

How does Marathon Petroleum’s EBT in 2018 compare with that in prior periods and what’s the forecast?

EBT for Marathon Petroleum increased substantially by 36.6% from $3.34 Bil in 2017 to $4.57 Bil in 2018.

We expect EBT to decline to $3.3 billion this year.

 

How do Marathon Petroleum’s Net Income and EPS over 2018 compare with that in prior periods and what’s the forecast?

You can view our interactive dashboard analysis for more information on Marathon’s Net Income and EPS.

 

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