Intrinsic value of Marathon Petroleum - MPC

Previous Close

$55.72

  Intrinsic Value

$135.59

stock screener

  Rating & Target

str. buy

+143%

  Value-price divergence*

+106%

Previous close

$55.72

 
Intrinsic value

$135.59

 
Up/down potential

+143%

 
Rating

str. buy

 
Value-price divergence*

+106%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MPC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 28.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -12.34
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
Revenue, $m
  63,332
  69,222
  75,362
  81,755
  88,405
  95,320
  102,506
  109,974
  117,734
  125,800
  134,186
  142,907
  151,981
  161,426
  171,261
  181,509
  192,191
  203,332
  214,957
  227,092
  239,766
  253,008
  266,849
  281,321
  296,459
  312,299
  328,878
  346,236
  364,413
  383,454
  403,403
Variable operating expenses, $m
 
  51,260
  55,775
  60,476
  65,366
  70,451
  75,735
  81,226
  86,933
  92,864
  99,030
  105,085
  111,757
  118,702
  125,935
  133,470
  141,325
  149,518
  158,066
  166,989
  176,309
  186,046
  196,223
  206,865
  217,997
  229,645
  241,836
  254,600
  267,966
  281,967
  296,637
Fixed operating expenses, $m
 
  14,727
  15,095
  15,473
  15,860
  16,256
  16,662
  17,079
  17,506
  17,944
  18,392
  18,852
  19,323
  19,806
  20,302
  20,809
  21,329
  21,863
  22,409
  22,969
  23,544
  24,132
  24,736
  25,354
  25,988
  26,637
  27,303
  27,986
  28,686
  29,403
  30,138
Total operating expenses, $m
  60,954
  65,987
  70,870
  75,949
  81,226
  86,707
  92,397
  98,305
  104,439
  110,808
  117,422
  123,937
  131,080
  138,508
  146,237
  154,279
  162,654
  171,381
  180,475
  189,958
  199,853
  210,178
  220,959
  232,219
  243,985
  256,282
  269,139
  282,586
  296,652
  311,370
  326,775
Operating income, $m
  2,378
  3,235
  4,491
  5,806
  7,179
  8,613
  10,108
  11,668
  13,295
  14,992
  16,763
  18,970
  20,900
  22,917
  25,025
  27,230
  29,537
  31,952
  34,482
  37,134
  39,914
  42,830
  45,890
  49,102
  52,474
  56,017
  59,739
  63,650
  67,761
  72,084
  76,628
EBITDA, $m
  4,379
  5,499
  6,925
  8,416
  9,972
  11,596
  13,290
  15,055
  16,896
  18,815
  20,817
  22,905
  25,085
  27,362
  29,741
  32,227
  34,829
  37,551
  40,401
  43,387
  46,516
  49,796
  53,237
  56,848
  60,637
  64,616
  68,794
  73,183
  77,795
  82,642
  87,736
Interest expense (income), $m
  478
  443
  563
  688
  819
  955
  1,096
  1,243
  1,396
  1,554
  1,719
  1,890
  2,069
  2,254
  2,447
  2,648
  2,858
  3,076
  3,304
  3,541
  3,789
  4,048
  4,319
  4,602
  4,897
  5,207
  5,531
  5,869
  6,224
  6,596
  6,985
Earnings before tax, $m
  1,822
  2,792
  3,929
  5,118
  6,360
  7,658
  9,012
  10,425
  11,900
  13,438
  15,044
  17,080
  18,832
  20,663
  22,578
  24,582
  26,679
  28,876
  31,179
  33,593
  36,125
  38,782
  41,571
  44,500
  47,577
  50,810
  54,208
  57,781
  61,537
  65,488
  69,644
Tax expense, $m
  609
  754
  1,061
  1,382
  1,717
  2,068
  2,433
  2,815
  3,213
  3,628
  4,062
  4,612
  5,085
  5,579
  6,096
  6,637
  7,203
  7,797
  8,418
  9,070
  9,754
  10,471
  11,224
  12,015
  12,846
  13,719
  14,636
  15,601
  16,615
  17,682
  18,804
Net income, $m
  1,174
  2,038
  2,868
  3,736
  4,643
  5,590
  6,579
  7,610
  8,687
  9,810
  10,982
  12,468
  13,747
  15,084
  16,482
  17,945
  19,476
  21,080
  22,760
  24,523
  26,371
  28,311
  30,347
  32,485
  34,731
  37,091
  39,572
  42,180
  44,922
  47,806
  50,840

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  887
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  44,413
  47,575
  51,795
  56,189
  60,760
  65,512
  70,451
  75,583
  80,917
  86,461
  92,224
  98,218
  104,454
  110,945
  117,705
  124,748
  132,090
  139,747
  147,737
  156,077
  164,788
  173,888
  183,401
  193,348
  203,752
  214,638
  226,033
  237,963
  250,456
  263,542
  277,253
Adjusted assets (=assets-cash), $m
  43,526
  47,575
  51,795
  56,189
  60,760
  65,512
  70,451
  75,583
  80,917
  86,461
  92,224
  98,218
  104,454
  110,945
  117,705
  124,748
  132,090
  139,747
  147,737
  156,077
  164,788
  173,888
  183,401
  193,348
  203,752
  214,638
  226,033
  237,963
  250,456
  263,542
  277,253
Revenue / Adjusted assets
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
Average production assets, $m
  25,465
  27,827
  30,295
  32,865
  35,539
  38,319
  41,207
  44,209
  47,329
  50,572
  53,943
  57,449
  61,096
  64,893
  68,847
  72,967
  77,261
  81,740
  86,413
  91,291
  96,386
  101,709
  107,273
  113,091
  119,177
  125,544
  132,209
  139,187
  146,494
  154,148
  162,168
Working capital, $m
  3,255
  2,630
  2,864
  3,107
  3,359
  3,622
  3,895
  4,179
  4,474
  4,780
  5,099
  5,430
  5,775
  6,134
  6,508
  6,897
  7,303
  7,727
  8,168
  8,630
  9,111
  9,614
  10,140
  10,690
  11,265
  11,867
  12,497
  13,157
  13,848
  14,571
  15,329
Total debt, $m
  10,572
  13,399
  16,387
  19,498
  22,734
  26,098
  29,595
  33,229
  37,005
  40,930
  45,011
  49,254
  53,670
  58,265
  63,051
  68,038
  73,236
  78,657
  84,314
  90,219
  96,386
  102,829
  109,564
  116,606
  123,972
  131,680
  139,747
  148,193
  157,039
  166,304
  176,011
Total liabilities, $m
  30,856
  33,683
  36,671
  39,782
  43,018
  46,382
  49,879
  53,513
  57,289
  61,214
  65,295
  69,538
  73,954
  78,549
  83,335
  88,322
  93,520
  98,941
  104,598
  110,503
  116,670
  123,113
  129,848
  136,890
  144,256
  151,964
  160,031
  168,477
  177,323
  186,588
  196,295
Total equity, $m
  13,557
  13,892
  15,124
  16,407
  17,742
  19,129
  20,572
  22,070
  23,628
  25,246
  26,929
  28,680
  30,501
  32,396
  34,370
  36,427
  38,570
  40,806
  43,139
  45,575
  48,118
  50,775
  53,553
  56,458
  59,496
  62,674
  66,002
  69,485
  73,133
  76,954
  80,958
Total liabilities and equity, $m
  44,413
  47,575
  51,795
  56,189
  60,760
  65,511
  70,451
  75,583
  80,917
  86,460
  92,224
  98,218
  104,455
  110,945
  117,705
  124,749
  132,090
  139,747
  147,737
  156,078
  164,788
  173,888
  183,401
  193,348
  203,752
  214,638
  226,033
  237,962
  250,456
  263,542
  277,253
Debt-to-equity ratio
  0.780
  0.960
  1.080
  1.190
  1.280
  1.360
  1.440
  1.510
  1.570
  1.620
  1.670
  1.720
  1.760
  1.800
  1.830
  1.870
  1.900
  1.930
  1.950
  1.980
  2.000
  2.030
  2.050
  2.070
  2.080
  2.100
  2.120
  2.130
  2.150
  2.160
  2.170
Adjusted equity ratio
  0.291
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,174
  2,038
  2,868
  3,736
  4,643
  5,590
  6,579
  7,610
  8,687
  9,810
  10,982
  12,468
  13,747
  15,084
  16,482
  17,945
  19,476
  21,080
  22,760
  24,523
  26,371
  28,311
  30,347
  32,485
  34,731
  37,091
  39,572
  42,180
  44,922
  47,806
  50,840
Depreciation, amort., depletion, $m
  2,001
  2,265
  2,434
  2,610
  2,793
  2,983
  3,181
  3,387
  3,600
  3,823
  4,053
  3,935
  4,185
  4,445
  4,716
  4,998
  5,292
  5,599
  5,919
  6,253
  6,602
  6,966
  7,347
  7,746
  8,163
  8,599
  9,055
  9,533
  10,034
  10,558
  11,107
Funds from operations, $m
  4,131
  4,303
  5,302
  6,346
  7,436
  8,574
  9,760
  10,997
  12,287
  13,632
  15,036
  16,403
  17,932
  19,529
  21,197
  22,942
  24,768
  26,678
  28,679
  30,775
  32,973
  35,277
  37,694
  40,231
  42,894
  45,690
  48,627
  51,713
  54,956
  58,364
  61,947
Change in working capital, $m
  145
  224
  233
  243
  253
  263
  273
  284
  295
  307
  319
  331
  345
  359
  374
  389
  406
  423
  442
  461
  482
  503
  526
  550
  575
  602
  630
  660
  691
  724
  758
Cash from operations, $m
  3,986
  4,079
  5,068
  6,103
  7,183
  8,311
  9,487
  10,713
  11,992
  13,326
  14,717
  16,072
  17,587
  19,170
  20,824
  22,553
  24,362
  26,255
  28,237
  30,314
  32,491
  34,774
  37,168
  39,681
  42,319
  45,088
  47,997
  51,054
  54,265
  57,641
  61,189
Maintenance CAPEX, $m
  0
  -1,744
  -1,906
  -2,075
  -2,251
  -2,434
  -2,625
  -2,822
  -3,028
  -3,242
  -3,464
  -3,695
  -3,935
  -4,185
  -4,445
  -4,716
  -4,998
  -5,292
  -5,599
  -5,919
  -6,253
  -6,602
  -6,966
  -7,347
  -7,746
  -8,163
  -8,599
  -9,055
  -9,533
  -10,034
  -10,558
New CAPEX, $m
  -2,892
  -2,363
  -2,468
  -2,570
  -2,674
  -2,780
  -2,889
  -3,002
  -3,120
  -3,243
  -3,371
  -3,506
  -3,648
  -3,797
  -3,954
  -4,120
  -4,294
  -4,479
  -4,673
  -4,878
  -5,095
  -5,323
  -5,564
  -5,818
  -6,086
  -6,368
  -6,665
  -6,978
  -7,307
  -7,654
  -8,020
Cash from investing activities, $m
  -2,941
  -4,107
  -4,374
  -4,645
  -4,925
  -5,214
  -5,514
  -5,824
  -6,148
  -6,485
  -6,835
  -7,201
  -7,583
  -7,982
  -8,399
  -8,836
  -9,292
  -9,771
  -10,272
  -10,797
  -11,348
  -11,925
  -12,530
  -13,165
  -13,832
  -14,531
  -15,264
  -16,033
  -16,840
  -17,688
  -18,578
Free cash flow, $m
  1,045
  -28
  694
  1,458
  2,259
  3,097
  3,974
  4,889
  5,845
  6,842
  7,882
  8,871
  10,005
  11,188
  12,425
  13,718
  15,070
  16,484
  17,966
  19,517
  21,143
  22,849
  24,638
  26,516
  28,487
  30,558
  32,734
  35,020
  37,425
  39,953
  42,611
Issuance/(repayment) of debt, $m
  -1,405
  2,855
  2,988
  3,111
  3,236
  3,365
  3,497
  3,634
  3,776
  3,925
  4,080
  4,244
  4,415
  4,596
  4,786
  4,987
  5,198
  5,421
  5,657
  5,905
  6,167
  6,443
  6,735
  7,042
  7,366
  7,708
  8,067
  8,446
  8,845
  9,265
  9,707
Issuance/(repurchase) of shares, $m
  1,574
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -566
  2,855
  2,988
  3,111
  3,236
  3,365
  3,497
  3,634
  3,776
  3,925
  4,080
  4,244
  4,415
  4,596
  4,786
  4,987
  5,198
  5,421
  5,657
  5,905
  6,167
  6,443
  6,735
  7,042
  7,366
  7,708
  8,067
  8,446
  8,845
  9,265
  9,707
Total cash flow (excl. dividends), $m
  479
  2,827
  3,682
  4,569
  5,495
  6,462
  7,470
  8,523
  9,621
  10,767
  11,963
  13,115
  14,420
  15,784
  17,211
  18,704
  20,268
  21,906
  23,622
  25,422
  27,310
  29,292
  31,373
  33,558
  35,853
  38,265
  40,801
  43,467
  46,270
  49,218
  52,319
Retained Cash Flow (-), $m
  -320
  -1,194
  -1,232
  -1,283
  -1,335
  -1,388
  -1,442
  -1,499
  -1,557
  -1,619
  -1,683
  -1,750
  -1,821
  -1,895
  -1,974
  -2,057
  -2,144
  -2,236
  -2,333
  -2,435
  -2,543
  -2,657
  -2,778
  -2,904
  -3,038
  -3,179
  -3,327
  -3,483
  -3,648
  -3,821
  -4,004
Prev. year cash balance distribution, $m
 
  859
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,492
  2,450
  3,286
  4,160
  5,074
  6,028
  7,024
  8,063
  9,148
  10,280
  11,365
  12,599
  13,889
  15,237
  16,648
  18,124
  19,670
  21,289
  22,987
  24,767
  26,635
  28,595
  30,653
  32,815
  35,087
  37,474
  39,983
  42,622
  45,396
  48,315
Discount rate, %
 
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
 
  2,353
  2,172
  2,720
  3,194
  3,589
  3,900
  4,123
  4,260
  4,312
  4,282
  4,142
  3,975
  3,750
  3,480
  3,174
  2,846
  2,508
  2,171
  1,845
  1,537
  1,256
  1,005
  787
  603
  451
  329
  234
  162
  109
  71
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Marathon Petroleum Corporation is engaged in refining, marketing, retail and transportation businesses in the United States and the largest east of the Mississippi. The Company operates through three segments: Refining & Marketing; Speedway; and Midstream. The Refining & Marketing segment refines crude oil and other feedstocks at the Company's seven refineries in the Gulf Coast and Midwest regions of the United States. Its Speedway segment sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States. The Company's Midstream is engaged in the operations of MPLX LP and certain other related operations. It gathers, processes and transports natural gas, natural gas liquids (NGLs), crude oil and refined products. MPLX is a limited partnership which owns, operates, develops and acquires midstream energy infrastructure assets.

FINANCIAL RATIOS  of  Marathon Petroleum (MPC)

Valuation Ratios
P/E Ratio 25.1
Price to Sales 0.5
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow 26.9
Growth Rates
Sales Growth Rate -12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 44.7%
Cap. Spend. - 3 Yr. Gr. Rate 19.1%
Financial Strength
Quick Ratio 32
Current Ratio 0
LT Debt to Equity 77.8%
Total Debt to Equity 78%
Interest Coverage 5
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11.4%
Return On Equity 8.8%
Return On Equity - 3 Yr. Avg. 18.6%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 10%
Gross Margin - 3 Yr. Avg. 9.5%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 6.9%
Operating Margin 3.8%
Oper. Margin - 3 Yr. Avg. 4.8%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 1.9%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 33.4%
Eff/ Tax Rate - 3 Yr. Avg. 33.7%
Payout Ratio 61.2%

MPC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MPC stock intrinsic value calculation we used $63332 million for the last fiscal year's total revenue generated by Marathon Petroleum. The default revenue input number comes from 2016 income statement of Marathon Petroleum. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MPC stock valuation model: a) initial revenue growth rate of 9.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.9%, whose default value for MPC is calculated based on our internal credit rating of Marathon Petroleum, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Marathon Petroleum.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MPC stock the variable cost ratio is equal to 74.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $14368 million in the base year in the intrinsic value calculation for MPC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.2% for Marathon Petroleum.

Corporate tax rate of 27% is the nominal tax rate for Marathon Petroleum. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MPC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MPC are equal to 40.2%.

Life of production assets of 14.6 years is the average useful life of capital assets used in Marathon Petroleum operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MPC is equal to 3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13557 million for Marathon Petroleum - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 512.181 million for Marathon Petroleum is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Marathon Petroleum at the current share price and the inputted number of shares is $28.5 billion.

RELATED COMPANIES Price Int.Val. Rating
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CVX Chevron 120.13 18.46  str.sell
HFC HollyFrontier 36.09 7.71  str.sell
VLO Valero Energy 77.42 346.87  str.buy
CLMT Calumet Specia 7.80 0.14  str.sell
PBF PBF Energy 27.36 157.10  str.buy

COMPANY NEWS

▶ Capline Operator to Conduct Reversal Open Season   [Oct-17-17 08:54AM  GlobeNewswire]
▶ Behind Marathon Petroleums Target Prices   [10:37AM  Market Realist]
▶ How Marathon Petroleums Refining Earnings Could Move in 3Q17   [Oct-12-17 10:37AM  Market Realist]
▶ Analysts Ratings: Where MPC, VLO, ANDV, and PSX Stand   [Oct-11-17 10:39AM  Market Realist]
▶ What Andeavors 3Q17 Refining Index Reveals   [07:35AM  Market Realist]
▶ MPC, ANDV, VLO, PSX: Refining Stocks 3Q17 Performance   [Oct-10-17 04:36PM  Market Realist]
▶ Comparing Andeavors Valuation to Peers   [Oct-09-17 07:39AM  Market Realist]
▶ Marathon Petroleum Getting Closer To Key Technical Measure   [03:00AM  Investor's Business Daily]
▶ Speedway to donate $250,000 for Florida storm recovery   [Sep-28-17 01:37PM  GlobeNewswire]
▶ Marathon May Invest in Pipelines, CEO Says   [Sep-25-17 08:38PM  Bloomberg Video]
▶ 3 High-Yield Stocks You Won't Want to Overlook   [Sep-24-17 12:47PM  Motley Fool]
▶ Stocks Showing Improved Relative Strength: Marathon Petroleum   [03:00AM  Investor's Business Daily]
▶ Oil Refiner Stocks Could Hit New Highs in 2018   [Sep-21-17 09:51AM  Investopedia]
▶ Marathon Petroleums Refining Earnings in 3Q17   [09:05AM  Market Realist]
▶ Energy Sector: Analysts Recommendations on September 48   [Sep-11-17 03:06PM  Market Realist]
▶ MPCs Segmental Earnings Trend in 2Q17   [10:36AM  Market Realist]
▶ How Is Marathon Petroleums Leverage Trending?   [Sep-08-17 10:36AM  Market Realist]
▶ Marathon Petroleums Moving Averages: What Do They Indicate?   [Sep-06-17 02:36PM  Market Realist]
▶ Speedway will remain under Marathon umbrella   [Sep-05-17 05:07PM  American City Business Journals]
▶ Motiva's Port Arthur refinery to return to service this weekend   [04:25PM  American City Business Journals]
▶ Stocks With Rising Relative Strength: Marathon Petroleum   [03:00AM  Investor's Business Daily]
▶ Texas Shale Hit Hard By Hurricane Harvey   [Aug-29-17 07:00PM  Oilprice.com]
▶ The Upcoming Oil Price Rebound   [03:00PM  Oilprice.com]
Financial statements of MPC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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