Back to top

Image: Bigstock

Should Value Investors Buy Marathon Petroleum (MPC) Stock?

Read MoreHide Full Article

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

One company value investors might notice is Marathon Petroleum (MPC - Free Report) . MPC is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A.

Investors should also recognize that MPC has a P/B ratio of 2.45. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. MPC's current P/B looks attractive when compared to its industry's average P/B of 5.36. MPC's P/B has been as high as 2.45 and as low as 1.60, with a median of 2.06, over the past year.

Finally, investors will want to recognize that MPC has a P/CF ratio of 10.51. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MPC's P/CF compares to its industry's average P/CF of 11.58. MPC's P/CF has been as high as 10.51 and as low as 5.42, with a median of 7.23, all within the past year.

These are only a few of the key metrics included in Marathon Petroleum's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MPC looks like an impressive value stock at the moment.

Published in