MARATHON PETROLEUM CORPORATION (MPC): what the price requires

At today's price, MARATHON PETROLEUM CORPORATION (MPC) is priced for +2.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MPC

Headline

FieldValue
TickerMPC
CompanyMARATHON PETROLEUM CORPORATION
Current price$298.66/sh
CompositionMidstream 71% / Refining 29%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed1.5%
Operating margin today5.2%
Margin compression implied-3.7pp
Implied growth2.4%
Multiple paid17x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.7pp.

Reconcile: at the x-ray's 9.3% required return this reads ~10.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.29σ
cohort percentile (of 45 peers)56
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.

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.

FamilyMedian price/FVModelsReads
Asset1.76x5expensive
Earnings1.18x4expensive
Relative1.22x5expensive
Growth1.47x3expensive

Families that justify the price: Earnings, Relative Families that call it expensive: Asset

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=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$202.621.47xyesFCF base $5.7B, growth -1% (input: historical growth), terminal g 0.5%, WACC 9.3%, 5yr projection
DCF Exit MultipleGrowth$281.481.06xyesExit EV/EBITDA: 4.0x / 7.3x / 12.3x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$218.871.36xyesP/E 12.71x (blended: static sector reference 10x + trailing (TTM) 19x), scenarios: 9.5x / 12.7x / 15.3x (bear / base = reference held flat / bull), EV/EBITDA 6x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$169.751.76xyesBV/sh $56.79, ROE (TTM) 27.6%, ke 9.3%
Two-Stage Excess ReturnAsset$298.821.00xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$182.481.64xyesRev $135.4B, growth -1% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 6x)
Peter Lynch Fair ValueRelative$182.281.64xyesEPS $15.19, growth 2% (input: historical EPS growth), PEG=9.51 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$334.060.89xyesNormalized EBIT (5y avg op income, one-time charges added back) $11.31B × (1−18%) / WACC 9.3% → EPV (no growth)
Residual IncomeAsset$255.461.17xyesBV $56.79 + 5yr PV of (ROE (TTM) 27.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$139.322.14xyes√(22.5 × EPS $15.19 × BVPS $56.79) — Graham's conservative floor
EV/EBITDA RelativeRelative$244.681.22xyesEBITDA $12.28B × sector EV/EBITDA 6.0x
FCF YieldEarnings$203.981.46xyesFCF $5702.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$490.130.61xyesEPS $15.19 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$38.887.68xyesBV $56.79 × (ROIC 6.3% / WACC 9.3%)
P/Sales SectorRelative$550.710.54xyesRevenue $135.38B × sector P/S 1.2x
PEG Fair ValueRelative$569.630.52xyesEPS $15.19 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$164.221.82xyesEPS $15.19 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$31.7b
Net debt / NOPAT (after-tax)5.51x
Net debt / operating income (pre-tax)4.53x
Interest coverage4.7x
Share count CAGR (buyback)-15.1%
Burning cashno

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)

Midstream (reported)

Methodology Note

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.

View the full interactive MPC report on boothcheck