Marathon: For the Long Run

09/11/2018 5:00 am EST


Vita Nelson

Founding Publisher and Editor, Moneypaper

Marathon Petroleum Corporation (MPC) is a petroleum refining, marketing, and transportation company headquartered in Ohio, explains Vita Nelson, dividend reinvestment expert and editor of DirectInvesting.

The midstream segment gathers, processes, and transports natural gas. It also transports and stores crude oil and refined products. The Speedway segment also sells transportation fuels and convenience products in the retail market in the Midwest, East Coast, and Southeast.

It is considered a solid and well-diversified business with a durable competitive advantage over its rivals. The firm enjoys a solid corporate culture.

Consensus estimates call for the company to earn about $5.23 per share this year, up from $3.89 per share last year, and to go to about $7.24 per share next year. Marathon Petroleum Corp. has paid dividends to investors since 2011 and has increased its payments for six consecutive years.

During the past five years, it has increased its dividends at an average rate of 44.0%, and its quarterly payment of $0.46 per share currently provides a yield of 2.21%.

Its P/E ratio of 10.4 is 49.3% below the S&P 500® index, its Price to Book ratio of 2.5 is 19.8% below the index, and its Price to Sales ratio of 0.5 is 76.8% below the index.

Technically, MPC also looks attractive, trading 3.5% below its 52 weeks high, while it is forming a price consolidation pattern between about $68 and $85, in which $53 is acting as a technical support level.

With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term. 

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