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The Zacks Analyst Blog Highlights Marathon Petroleum, Phillips 66 and Valero Energy
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For Immediate Release
Chicago, IL – June 22, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Marathon Petroleum Corp. (MPC - Free Report) , Phillips 66 (PSX - Free Report) and Valero Energy Corp. (VLO - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Energy Stock Valuations Are Coming Down. Should You Buy?
The energy sector has declined 12% over the past month although it is still up 15.4% year to date. The shutdowns in China and the rate hikes across major economies have increased concerns about reduced demand for oil that would be a natural fallout from shrinking economic activity.
While these concerns are not to be brushed aside, it's worth noting that China shutdowns are unlikely to continue indefinitely. Also, OPEC+ is not meeting production targets because political disruptions in Libya continue to impact output. Investors also appear to be discounting the summer holiday-driven demand in Europe and North America.
As a result, crude prices, both WTI and Brent, continue to climb to above $110 a barrel. While gasoline prices were also impacted by the interest rate hike and the government's consideration of a cap on exports, current prices are still close to around $5 a gallon, which is more than double the level it has been in the last five years.
So there is still a considerable imbalance between demand and supply, something that is likely to persist until there is some sort of normalcy in Ukraine.
Considering the above, the retreat in oil stock prices looks like an invitation to buy, particularly given the way that estimates continue to increase.
In the case of Zacks #1 (Strong Buy) ranked Marathon Petroleum Corp. for example, analysts have taken the current year EPS estimate up from $10.17 30 days ago to $13.72 today. Similarly, the 2023 estimate has gone from $7.99 to $10.08. This represents a 34.9% increase in the 2022 estimate and a 26.2% increase in 2023.
Additionally, earnings are expected to grow 460% this year on top of a 9% increase in revenue. Marathon Petroleum's dividend yields 2.66%. The company trades at 7.27X forward earnings and 0.36X forward sales, both of which are close to its lowest point over the past year. So, the shares may be considered cheap.
Another oil refining and marketing stock worth considering is Phillips 66. It is currently expected to grow revenue and earnings by 18% and 114% this year. Analysts have raised this Zacks #1 ranked company's 2022 and 2023 earnings estimates by a respective 29.1% and 13.0% in the last 30 days.
Phillips 66 also pays a dividend that yields 4.29%. The company trades at 8.23X earnings 0.32X sales, both of which are below the respective median levels over the past year. Therefore, the shares are undervalued.
Valero Energy Corp. is a player in the same market. The Zacks Rank #1 stock is seeing an exceptionally strong estimate revisions trend. Earrings expectations for 2022 have doubled in the last 90 days. 2023 estimates are also growing strongly. In the last 30 days, the 2022 and 2023 estimates have jumped 26.2% and 35.0%, respectively.
Earnings growth expectations for the year are currently pegged at 493.6% and this is expected to come on top of revenue growth of 33.0%. Additionally, Valero's dividend yields 3.49%. Trading at a P/E of 7.37X and a P/S of 0.30X sales, the shares are definitely worth buying at this point.
Why Haven't You Looked at Zacks' Top Stocks?
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Marathon Petroleum, Phillips 66 and Valero Energy
For Immediate Release
Chicago, IL – June 22, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Marathon Petroleum Corp. (MPC - Free Report) , Phillips 66 (PSX - Free Report) and Valero Energy Corp. (VLO - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Energy Stock Valuations Are Coming Down. Should You Buy?
The energy sector has declined 12% over the past month although it is still up 15.4% year to date. The shutdowns in China and the rate hikes across major economies have increased concerns about reduced demand for oil that would be a natural fallout from shrinking economic activity.
While these concerns are not to be brushed aside, it's worth noting that China shutdowns are unlikely to continue indefinitely. Also, OPEC+ is not meeting production targets because political disruptions in Libya continue to impact output. Investors also appear to be discounting the summer holiday-driven demand in Europe and North America.
As a result, crude prices, both WTI and Brent, continue to climb to above $110 a barrel. While gasoline prices were also impacted by the interest rate hike and the government's consideration of a cap on exports, current prices are still close to around $5 a gallon, which is more than double the level it has been in the last five years.
So there is still a considerable imbalance between demand and supply, something that is likely to persist until there is some sort of normalcy in Ukraine.
Considering the above, the retreat in oil stock prices looks like an invitation to buy, particularly given the way that estimates continue to increase.
In the case of Zacks #1 (Strong Buy) ranked Marathon Petroleum Corp. for example, analysts have taken the current year EPS estimate up from $10.17 30 days ago to $13.72 today. Similarly, the 2023 estimate has gone from $7.99 to $10.08. This represents a 34.9% increase in the 2022 estimate and a 26.2% increase in 2023.
Additionally, earnings are expected to grow 460% this year on top of a 9% increase in revenue. Marathon Petroleum's dividend yields 2.66%. The company trades at 7.27X forward earnings and 0.36X forward sales, both of which are close to its lowest point over the past year. So, the shares may be considered cheap.
Another oil refining and marketing stock worth considering is Phillips 66. It is currently expected to grow revenue and earnings by 18% and 114% this year. Analysts have raised this Zacks #1 ranked company's 2022 and 2023 earnings estimates by a respective 29.1% and 13.0% in the last 30 days.
Phillips 66 also pays a dividend that yields 4.29%. The company trades at 8.23X earnings 0.32X sales, both of which are below the respective median levels over the past year. Therefore, the shares are undervalued.
Valero Energy Corp. is a player in the same market. The Zacks Rank #1 stock is seeing an exceptionally strong estimate revisions trend. Earrings expectations for 2022 have doubled in the last 90 days. 2023 estimates are also growing strongly. In the last 30 days, the 2022 and 2023 estimates have jumped 26.2% and 35.0%, respectively.
Earnings growth expectations for the year are currently pegged at 493.6% and this is expected to come on top of revenue growth of 33.0%. Additionally, Valero's dividend yields 3.49%. Trading at a P/E of 7.37X and a P/S of 0.30X sales, the shares are definitely worth buying at this point.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.