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Are Investors Undervaluing Marathon Petroleum (MPC) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Marathon Petroleum (MPC - Free Report) is a stock many investors are watching right now. MPC is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
Investors should also note that MPC holds a PEG ratio of 0.28. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MPC's industry has an average PEG of 0.62 right now. Over the last 12 months, MPC's PEG has been as high as 3.88 and as low as 0.25, with a median of 0.60.
Another notable valuation metric for MPC is its P/B ratio of 1.50. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.76. Over the past year, MPC's P/B has been as high as 2.03 and as low as 1.06, with a median of 1.44.
Another great Oil and Gas - Refining and Marketing stock you could consider is Phillips 66 (PSX - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Phillips 66 is trading at a forward earnings multiple of 6.39 at the moment, with a PEG ratio of 0.52. This compares to its industry's average P/E of 4.84 and average PEG ratio of 0.62.
Over the last 12 months, PSX's P/E has been as high as 19.08, as low as 5.86, with a median of 10.49, and its PEG ratio has been as high as 2.40, as low as 0.48, with a median of 0.65.
Phillips 66 sports a P/B ratio of 1.58 as well; this compares to its industry's price-to-book ratio of 1.76. In the past 52 weeks, PSX's P/B has been as high as 2.40, as low as 1.45, with a median of 1.71.
Value investors will likely look at more than just these metrics, but the above data helps show that Marathon Petroleum and Phillips 66 are likely undervalued currently. And when considering the strength of its earnings outlook, MPC and PSX sticks out as one of the market's strongest value stocks.