Company Review Thursday · Marathon Petrolium

Company Review Thursday: Marathon Petrolium Corporation

Summer means the demand for gas is going to go up. People are starting vacations with every intention to drive long distance or put in some miles at American Airline or Southwest. So naturally as the demand for gas and oil go up, the price of petroleum based products will too. I’m not interested in investing directly into commodities, as I don’t have the patience or know how to analyze those things, so I’ve invested in a company responsible for refining, retailing and transporting petroleum called Marathon Petroleum Corporation.

Company Snapshot

Name: Marathon Petroleum Corporation (as of close 5/18/2016)

Ticker: MPC
Current Price: $36.07
52 Week High Price:$60.38
52 Week Low Price: $29.24
Market Capitalization: $19.96B (Large Capital)
Price/Earnings (P/E Ratio): 10.06
Earnings/Share (EPS): $3.65
Dividend: $1.28/year (3.59% yield)
Industry: Materials
Primary Business: Oil & Gas Retail/Refinery

The Good, The Bad, The Ugly

The prices is what attracts me most to this company. MPC being less than 40 means that it is definitely in a price range where I could purchase 5-10 shares immediately. So I did. I knew I wanted some exposure to the oil industry and honestly that’s because I’m curious. I’m curious about oil as a commodity and how lately the price of a barrel has bottomed out,  rebounded and somehow got itself tangled up with the stock market. But I’m not so curious to actually trade a future on 100 barrels of oil. I don’t have the analytical tools needed to make a wise decision in the future space.

However the other appealing thing about MPC is the fact that the total revenue for the past 3 years as declined, but the gross profit of the company has increased. That means that the gross profit margin has actually increase over the past 3 years. Why is that important? That means despite any fluctuations in the variable costs of petroleum, workers, or anything like that MPC has remained a profitable company.

Metric Name 2013 2014 2015
Total Revenue $100.16B $97.817B $72.051B
Gross Profit 12.402B 13.542B 16.16B
Gross Profit Margin 12.38% 13.84% 22.43%

Another interesting to point out about MPC is the fact they have a tremendous amount of total assets mostly due to a big jump in property and equipment. Now equipment depreciates so if there was a significant amount of equipment purchased in 2015, then I would be concerned with how the company would unload it if some macroeconomic oil/petroleum market change has a negative impact on all oil refineries and retailers.

But I saw this company as a cheap way in to figure things out in the oil space. So far I’ve made a dollar per share I own. Hoping the price gets back to its 52 week high of $60.38. If it does, I’ll gain at least $25 per share I own. Be sure to check out my show tonight at 8:30pm here and make sure to have a pen and paper. You definitely want to take notes.

Until next post folks…

 

*Nothing in this post is any type of advice. Just giving my perspective on this company*

2 thoughts on “Company Review Thursday: Marathon Petrolium Corporation

  1. Oil is where it’s at! I haven’t looked at Marathon that much, but the dividend looks nice, and the balance sheet looks better than some. I’m not doing well in all of my energy picks yet, but overall it’s good. (YAY for ETE) I think 2 years from now people will wish they had gotten into these stocks, Marathon included. People will have gotten good prices, and those who are inclined to simply keep them will have dividends that go up up up when oil returns, and that can fuel their portfolio in other areas for years to come. We just have to accept the volatility that comes with such investments. It doesn’t have to happen that way, but that’s where I’m putting my money. Great post.

    Liked by 1 person

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