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Should Value Investors Buy Marathon Petroleum (MPC) Stock?

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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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Marathon Petroleum (MPC - Free Report) is a stock many investors are watching right now. MPC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.74. This compares to its industry's average Forward P/E of 10.45. Over the last 12 months, MPC's Forward P/E has been as high as 11.61 and as low as 6.88, with a median of 8.92.

MPC is also sporting a PEG ratio of 0.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MPC's PEG compares to its industry's average PEG of 1.09. Over the past 52 weeks, MPC's PEG has been as high as 1.13 and as low as 0.48, with a median of 0.87.

We should also highlight that MPC has a P/B ratio of 0.96. 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. This stock's P/B looks solid versus its industry's average P/B of 1.25. Over the past 12 months, MPC's P/B has been as high as 1.55 and as low as 0.69, with a median of 0.94.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MPC has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.37.

Finally, our model also underscores that MPC has a P/CF ratio of 6.13. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MPC's current P/CF looks attractive when compared to its industry's average P/CF of 7.06. Over the past 52 weeks, MPC's P/CF has been as high as 8.86 and as low as 4.08, with a median of 6.23.

These are just a handful of the figures considered in Marathon Petroleum's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MPC is an impressive value stock right now.


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