A prudent investment decision involves buying wealthy stocks at an apt time while selling those that are prone to risk. A share price appreciation and strong fundamentals signal a stock’s bullish run.
Shares of Marathon Petroleum Corporation (NYSE:MPC) are likely to display an uptrend on the back of its solid third-quarter earnings performance and healthy fuel margins.
As a matter of fact, if you still haven’t taken advantage of the stock’s share price rise, it’s time you add it to your portfolio.
What Makes It an Attractive Pick?
An Outperformer
A glance at the company’s price trend shows that the stock had an impressive run on the bourse in the past three years. Shares of Marathon Petroleum have rallied 20.1%, outperforming the 2.3% growth of its industry.
Solid Rank & VGM Score
This leading independent refiner, transporter and marketer of petroleum products currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
Upbeat Q3 Performance
Marathon Petroleum recently reported third-quarter 2019 earnings per share of $1.63, comprehensively beating the Zacks Consensus Estimate of $1.30. Strength in the bottom line can be attributed to solid throughput volumes, which rose 55% year over year. Further, the company’s income from the Retail segment totaled $442 million, skyrocketing 174.5% from the year-ago period. In addition to a sturdy performance at Marathon Petroleum’s former Speedway unit, the segment’s results were boosted by contributions from the acquired retail assets of Andeavor.
Northward Estimate Revisions
The direction of estimate revisions serves as an important pointer when it comes to the stock price movement. The Zacks Consensus Estimate for 2019 earnings has been revised 12.88% upward over the past 60 days. Earnings estimates for 2020 have moved 4.94% north.
Positive Earnings Surprise History
Marathon Petroleum flaunts a stellar surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters.
Key Drivers
Marathon Petroleum’s diversified portfolio of refining, retail and midstream operations bode well, somewhat reducing its exposure to commodity price fluctuations. While the company’s refining profitability is persistently affected amid lowering crack spreads.
Marathon Petroleum’s midstream arm MPLX LP (NYSE:MPLX) did provide the necessary cushion. MPLX’s robust portfolio of projects in the Permian, Marcellus and STACK shale plays offers significant growth opportunities along with a fee-based stable revenue stream, which is reflected in the parent company’s overall results.
The company's financial flexibility and a solid balance sheet are real assets. Importantly, Marathon Petroleum is known for raising dividends and has an active share repurchase program. These highlight the company’s commitment to return more value to its shareholders. Notably, the company returned $848 million capital to its investors in the last reported quarter. As a show of confidence in its cash flow generating abilities going forward, Marathon Petroleum recently announced a 15% hike in its quarterly dividend.
Notably, this Findlay, OH-based leading independent refiner is working on forming the largest U.S.-listed convenience store operator by separating Speedway from its parent platform to spin off into an independent publicly traded company. The transaction, contingent upon pending approvals, is scheduled to close by the end of 2020.
Zacks Rank & Other Key Picks
Some other top-ranked stocks in the energy space are CNX Resources Corporation (NYSE:CNX) and Kosmos Energy Ltd. (NYSE:KOS) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Kosmos Energy Ltd. (KOS): Free Stock Analysis Report
CNX Resources Corporation. (CNX): Free Stock Analysis Report
Marathon Petroleum Corporation (MPC): Free Stock Analysis Report
MPLX LP (MPLX): Free Stock Analysis Report
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