MARATHON PETROLEUM CORPORATION (MPC): what the price assumes
In the published model solve dated 2026-Q2, anchored at $368.83, MARATHON PETROLEUM CORPORATION (MPC) is priced for +0.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/MPC
Headline
| Field | Value |
|---|---|
| Ticker | MPC |
| Company | MARATHON PETROLEUM CORPORATION |
| Current price | $368.83/sh |
| Composition | Refining & Marketing - refined products 88% / Refining & Marketing - crude oil 4% / Refining & Marketing - services and other 1% / Midstream - refined products 2% / Midstream - services and other 3% / Renewable Diesel - refined products 2% / Renewable Diesel - services and other 0% / Other service revenue 0% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 1.8% |
| Operating margin today | 6.7% |
| Margin compression (value-band) | -4.9pp |
| Implied growth | 0.5% |
| Multiple paid | 15x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -0.32σ |
| cohort percentile (of 48 peers) | 63 |
Valuation X-Ray
Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.15x | 5 | expensive |
| Earnings | 1.44x | 4 | expensive |
| Relative | 1.34x | 2 | expensive |
| Growth | 1.64x | 3 | expensive |
Families that call it expensive: Asset, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $204.79 | 1.80x | yes | FCF base $5.7B, growth -1% (input: historical growth), terminal g 0.5%, WACC 9.3%, 5yr projection |
| DCF Exit Multiple | Growth | $330.51 | 1.12x | yes | Exit EV/EBITDA: 4.0x / 8.9x / 13.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/E 13.98x (blended: static sector reference 10x + trailing (TTM) 23x), scenarios: 10.5x / 14.0x / 16.8x (bear / base = reference held flat / bull), EV/EBITDA 6x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $171.53 | 2.15x | yes | BV/sh $57.39, ROE (TTM) 27.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $301.95 | 1.22x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $225.35 | 1.64x | yes | Rev $135.4B, growth -1% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 6x) |
| Peter Lynch Fair Value | Relative | $182.28 | 2.02x | yes | EPS $15.19, growth 2% (input: historical EPS growth), PEG=11.63 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $337.65 | 1.09x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $11.31B × (1−18%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | $258.14 | 1.43x | yes | BV $57.39 + 5yr PV of (ROE (TTM) 27.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $140.05 | 2.63x | yes | √(22.5 × EPS $15.19 × BVPS $57.39) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $12.28B × sector EV/EBITDA 6.0x |
| FCF Yield | Earnings | $206.12 | 1.79x | yes | FCF $5702.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $490.13 | 0.75x | yes | EPS $15.19 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $39.30 | 9.38x | yes | BV $57.39 × (ROIC 6.3% / WACC 9.3%) |
| P/Sales Sector | Relative | — | — | no | Revenue $135.38B × sector P/S 1.2x |
| PEG Fair Value | Relative | $569.63 | 0.65x | yes | EPS $15.19 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $164.22 | 2.25x | yes | EPS $15.19 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
Material operating units span distinct economics, so a single sector multiple or target margin is not representative. Consolidated cash-flow lenses may remain as secondary checks, while segment SOTP is primary.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Refining & Marketing | operating | enterprise | $124.3b | — | $40.5b indicative EV subtotal | indicative enterprise value |
| Midstream | operating | enterprise | $11.5b | — | $104.0b indicative EV subtotal | indicative enterprise value |
| Renewable Diesel | operating | enterprise | $2.8b | — | $1.2b indicative EV subtotal | indicative enterprise value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $31.7b |
| Net debt / NOPAT (after-tax) | 4.28x |
| Net debt / operating income (pre-tax) | 3.52x |
| Interest coverage | 5.8x |
| Share count CAGR (buyback) | -15.1% |
| Burning cash | no |
Bullet Takeaways
At $242.82 Marathon Petroleum trades close to fair on most standard methods, which cluster within roughly 15% of the price. The reverse solve implies the market is actually pricing operating income to shrink about 3.8% a year, a fade rather than growth, which the model reads as within range for a refiner near a margin peak.
The recent earnings trajectory has been the engine. Q1 2026 adjusted EPS of $1.65 beat the $1.09 estimate, adjusted EBITDA rose $788 million year over year to $2.76 billion, and the stock is up about 51% year to date on refining-margin strength.
The central tension is capital allocation at a cyclical high. Marathon has been retiring shares at roughly 15% a year and just expanded buyback capacity to $8.6 billion, while its dividend and repurchase pace are, in its own words, highly dependent on refining margins.
Bull Case
The earnings trajectory is doing the heavy lifting. In Q1 2026 Marathon delivered adjusted EPS of $1.65 against a $1.09 estimate, a clean beat, and adjusted EBITDA climbed $788 million year over year to $2.76 billion. The drivers were specific and operational rather than one-off: a sharp improvement in refining margins, higher utilization and completed yield-improvement projects, recognition of clean-fuel tax credits, and an aggressive capital-return program. The stock is up roughly 51% year to date on that combination, and analysts have raised projections, with one widely cited rank moving to Strong Buy.
The two-segment structure gives the refining cyclicality a ballast. Marathon pairs its Refining and Marketing business with a midstream franchise held through MPLX, whose cash flows are far steadier than crack spreads, and whose growth capital is "focused on expanding its Permian to Gulf Coast integrated value chain" (FY2025 10-K, accession 0001510295-26-000009). That midstream distribution stream funds a meaningful part of the corporate dividend, so the equity is not a pure refining-margin bet. Trailing return on equity near 27.6% reflects how much cash the combined system throws off when margins cooperate.
The capital return is the clearest expression of management confidence. The share count has fallen about 15% over the past year, and in early May 2026 the board authorized an additional $5.0 billion of repurchases, lifting total buyback capacity to $8.6 billion, alongside a $1.00 quarterly dividend. On normalized economics the methods support the price: Earnings Power Value on five-year average operating income reaches about $334, the residual-income method $255, and the reverse-DCF normalized band runs well above the current quote. For a buyer who believes mid-cycle refining margins hold and the buyback keeps shrinking the count, the bull case is a high-return cash machine returning capital faster than its earnings are eroding.
Bear Case
The capital-allocation question is the one a holder should sit with: Marathon is buying back stock aggressively at what may be a cyclical peak. The share count has dropped about 15% in a year and the board just expanded buyback capacity to $8.6 billion, which is excellent if margins hold and a value-destroying mistake if they revert. The company itself ties the entire return program to the cycle, warning that its "results, cash flows, future rate of growth, the carrying value of our assets and our ability to execute share repurchases and pay our dividend at intended levels are highly dependent on the margins" (FY2025 10-K, accession 0001510295-26-000009). Retiring shares at a high price with margin-dependent cash is the textbook way a cyclical erodes per-share value precisely when it looks strongest.
The market is already pricing the fade, which limits the upside the buyback is chasing. The reverse solve shows the price embeds operating income shrinking about 3.8% a year over five years, with the implied margin falling from the current 6.7% toward under 1%. In other words, at $242.82 (June 27, 2026) the standard methods cluster near fair, and the multiple sits in the lower half of the refiner peer range, so the cheapness that would justify heavy repurchases is not obviously there. Refining margins are notoriously mean-reverting, and the same clean-fuel tax credits and elevated cracks that powered the Q1 beat can reverse.
The MPLX structure adds a governance wrinkle worth naming. A large share of Marathon's dependable cash comes through its midstream affiliate, and the relationship runs on intercompany arrangements for "management services provided between us and MPLX and for executive management services and certain general and administrative services" that are eliminated in consolidation (accession 0001510295-26-000009). The economics are real but the structure concentrates the steady-cash dependence on one related entity. Net debt is about $31.7 billion at roughly 3.5x trailing operating income with interest coverage near 5.8x, comfortable at peak margins and tighter if the cycle turns. The bear case is not that the business is weak. It is that management is leaning hardest into buybacks at the moment the price already assumes the good times fade.
Valuation
Marathon is the unusual case where the standard methods broadly agree, and the agreement is near today's price. The growth, relative, and earnings families cluster within roughly 15% of $242.82: DCF Exit Multiple at $243, EV/EBITDA Relative at $245, Relative Valuation at $211, DCF Perpetual Growth at $203, and FCF yield at $204. The asset family is split, with Residual Income at $255 and Two-Stage Excess Return at $299 above the price while ROIC-justified book ($39) sits far below on a depressed mid-cycle ROIC.
The inversion reframes the same picture as a fade rather than growth. At $242.82 the market is paying about 14x company-wide operating income, which implies operating income contracting about 3.8% a year over five years, computed at a 7.7% cost of capital with the implied margin falling from 6.7% toward under 1%. The reverse solve reads this as within range and in the lower half of the sector multiple, which is the model's way of saying the price is consistent with normal refiner cyclicality, not a stretch.
The practical read is a fairly-valued cyclical with optionality on margins and capital return. Earnings Power Value on five-year average operating income reaches $334, well above the price, which is the bull's normalized anchor. The relative and growth methods near $200 to $245 are the realist's anchor. The gap between them is the cycle: pay roughly 14x current operating income and you are betting margins do not deteriorate faster than the modest fade already embedded, with the buyback shrinking the count in your favor if they hold.
Catalysts
The Q1 2026 print, reported in early 2026, is the load-bearing recent event: adjusted EPS of $1.65 versus a $1.09 estimate and adjusted EBITDA of $2.76 billion, up $788 million year over year, driven by refining-margin strength, higher utilization, completed yield-improvement projects, and clean-fuel tax credits (Investing.com; Simply Wall St). The stock has rallied about 51% year to date, and analyst sentiment is bullish, with raised estimates and a Strong Buy rank cited.
The forward set is dominated by capital return and margins. In early May 2026 the board authorized an additional $5.0 billion of repurchases, bringing total buyback capacity to $8.6 billion, and declared $1.00 quarterly dividends payable in March and June 2026 (Simply Wall St; Finimize). The swing factors into the next prints are the path of refining crack spreads and utilization, the durability of clean-fuel tax credits, MPLX distribution growth from its Permian-to-Gulf-Coast expansion, and the pace at which the expanded buyback keeps reducing the share count.
Sources: Marathon Petroleum Q1 2026 results (Investing.com; MPC 8-K, 2026); Finimize and TIKR rally coverage; Simply Wall St dividend and buyback coverage (2026).
Peer Cohorts (Per Segment, With Filing Citations)
Refining & Marketing / Renewable Diesel (reported)
- VLO (VALERO ENERGY CORP/TX)
- FY2025 10-K: …relating to transportation fuels regulated by low-carbon fuels regulations, policies, and standards. OUR OPERATIONS Our operations are managed through the following reportable segments: • our Refining segment, which includes the operations of our petroleum refineries, the associated activities to market our refined…
- FY2025 10-K: …• the effect, impact, potential duration or timing, or other implications of global geopolitical and other conflicts and tensions, and government and other responses thereto; • future Refining segment margins, including gasoline and distillate margins, and differentials; • future Renewable Diesel segment margins; •…
- PSX (Phillips 66)
- FY2025 10-K: …volatility in the price and availability of raw materials, supply chain interruptions, material adverse changes in customer relationships including any failure of a customer to perform its obligations under agreements with us, and risks associated with worldwide or regional economic conditions. Competition Risks…
- FY2025 10-K: …to focus on Refining performance, targeting an annual clean product yield of greater than 86%, crude oil capacity utilization rates higher than industry average and continuing to improve our competitive cost structure. During 2025, our worldwide refining crude oil capacity average utilization rate was 94% for 2025,…
- PBF (PBF ENERGY INC.)
- FY2025 10-K: …refiners that import products into the United States and with producers and marketers in other industries supplying alternative forms of energy and fuels to satisfy the requirements of industrial, commercial and individual consumers. Some of our competitors have expanded the capacity of their refineries and…
- FY2025 10-K: BF Energy Class A common stock could fall. Risks Relating to Our Business and Industry Demand for our refined products can significantly decline due to changes in global and regional economic conditions. Business closings or reduced activity and layoffs in the markets we operate may adversely affect demand for our…
- DINO (HF SINCLAIR CORPORATION)
- FY2025 10-K: …any of the crude oil feedstocks used at our refineries. Though we license our brand, as of December 31, 2025, we do not currently own or operate retail outlets and therefore are dependent upon others for outlets for our refined products. Certain of our competitors, however, obtain a portion of their feedstocks from…
- FY2025 10-K: …refineries and Asphalt. The Renewables segment includes the operations of the Artesia, Cheyenne and Sinclair RDUs and the Artesia PTU. The Marketing segment includes branded fuel sales. The Lubricants & Specialties segment includes the operations of our Petro-Canada Lubricants, Red Giant Oil and Sonneborn businesses…
- PARR (Par Pacific Holdings, Inc.)
- FY2025 10-K: , and Wyoming refineries' throughput or sales volumes averaged over the year ended December 31, 2023, plus the Montana refinery's throughput or sales volumes averaged over the period from June 1, 2023, to December 31, 2023. (2) We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total…
- FY2025 10-K: 6.6 million in environmental expenses, and $5.7 million in other expenses, and an increase of $4.0 million in third party revenue. These improvements were partially offset by an $11.8 million in rent expense, $5.5 million related to lower throughput, and $4.1 million of reduced gross margin related to the Wyoming…
Midstream (reported)
- WMB (WILLIAMS COMPANIES, INC.)
- FY2025 10-K: L pipeline and fractionated at either its Moundsville or Harrison fractionation facility. The resulting products are then transported on truck, rail, or pipeline. Ohio Valley Midstream provides residue natural gas take away options for customers with interconnections to three interstate transmission pipelines. Certain…
- FY2025 10-K: …gas marketers and producers, intrastate pipelines, direct industrial users, and electrical power generators. Customers in Williams' midstream businesses are comprised of oil and natural gas producer counterparties. Customers for Williams' product sales are comprised of public utilities, gas marketers, and direct…
- OKE (ONEOK INC /NEW/)
- FY2025 10-K: …and international energy demand, contribute to energy security and provide safe, reliable and responsible energy solutions needed today and into the future. Midstream Value Chain The midstream value chain is a vital part of the energy industry. After crude oil and natural gas are produced from upstream wells, we use…
- FY2025 10-K: Midstream Partners, LP, as guarantor, and Computershare Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to EnLink Midstream, LLC's Current Report on Form 8-K, filed Jan uary 31, 2025, File No. 001-36336). 4.80 Second Supplemental Indenture, dated as of Jan uary 31, 2025, by and among ONEOK,…
- KMI (KINDER MORGAN, INC.)
- FY2025 10-K: …from the acquired Outrigger Energy assets on our Hiland Midstream assets; and (iii) higher gathering rates on KinderHawk. Overall, Midstream's revenue changes are partially offset by corresponding changes in costs of sales. In addition, the increase in Midstream includes a gain on the sale of our equity interest in…
- FY2025 10-K: I LLC for a purchase price of $ 648 million, including purchase price adjustments for working capital. Other long-term assets within the purchase price allocation consist of a customer relationships intangible with a weighted average amortization period of approximately 15 years. The acquisition includes a 0.27 Bcf/d…
- TRGP (TARGA RESOURCES CORP.)
- FY2025 10-K: …13, 2026. Growth Drivers, Competitive Strengths and Strategies While we believe that we are well positioned to execute our business strategies based on our growth drivers, competitive strengths and strategies outlined below, our business involves numerous risks and uncertainties which may prevent us from executing…
- FY2025 10-K: …was determined using the cost approach and was primarily comprised of Gathering and Processing assets that will be depreciated on a straight-line basis over the useful lives of the assets. The associated useful lives of property, plant and equipment were based on the period over which the assets are expected to…
- ET (ENERGY TRANSFER LP)
- FY2025 10-K: …systems due to higher rates on higher contracted volumes, a $40 million negative impact in the prior period related to the conclusion of a rate case on our Panhandle system, a $24 million increase in operational gas sales and liquids and a $5 million increase in storage and parking revenue; 114 Table of Contents…
- FY2025 10-K: …are typically due the month after the services have been performed. F - 66 Table of Contents Index to Financial Statements The performance obligations with respect to our midstream segment's contracts are to provide gathering, transportation and processing services, each of which would be completed on or about the…
- EPD (ENTERPRISE PRODUCTS PARTNERS L.P.)
- FY2025 10-K: …we have an unconditional right of payment from the customer. Payments received from customers in advance of the period in which we satisfy a performance obligation are recorded as deferred revenue (a contract liability) on our consolidated balance sheet. Our revenue streams are derived from the sale of products and…
- FY2025 10-K: …terminals (including those used to export liquefied petroleum gases ("LPG") and ethane); • crude oil gathering, transportation, storage, and marine terminals; • propylene production facilities (including propane dehydrogenation ("PDH") facilities), butane isomerization, octane enhancement, isobutane dehydrogenation…
- PAA (PLAINS ALL AMERICAN PIPELINE LP)
- FY2025 10-K: …and providing upstream connectivity and downstream market optionality. • Wink to Webster Pipeline (Permian to Houston). We own an approximate 17% interest in the entity that owns the Wink to Webster Pipeline ("W2W Pipeline"), which in turn owns 100% of certain segments of the W2W Pipeline and a 71% UJI in the segment…
- FY2025 10-K: …entity as a consolidated subsidiary in our Consolidated Financial Statements within our Crude Oil segment. The transaction resulted in a net gain of approximately $ 31 million, which represents the difference between the fair value of the entity and the historical book value of our investment. This gain is reflected…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.