Intrinsic value of Marathon Petroleum - MPC

Previous Close

$66.46

  Intrinsic Value

$323.84

stock screener

  Rating & Target

str. buy

+387%

Previous close

$66.46

 
Intrinsic value

$323.84

 
Up/down potential

+387%

 
Rating

str. buy

*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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Marathon Petroleum (MPC) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  17.80
  16.52
  15.37
  14.33
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
Revenue, $m
  63,332
  74,605
  86,930
  100,289
  114,662
  130,024
  146,353
  163,626
  181,825
  200,935
  220,946
  241,855
  263,662
  286,377
  310,013
  334,592
  360,139
  386,688
  414,277
  442,950
  472,757
  503,751
  535,994
  569,550
  604,489
  640,885
  678,819
  718,374
  759,639
  802,710
  847,685
Variable operating expenses, $m
 
  55,219
  64,281
  74,105
  84,674
  95,970
  107,978
  120,679
  134,061
  148,114
  162,828
  177,844
  193,880
  210,583
  227,964
  246,037
  264,823
  284,346
  304,633
  325,717
  347,635
  370,427
  394,136
  418,811
  444,503
  471,266
  499,160
  528,246
  558,590
  590,262
  623,333
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
  69,946
  79,376
  89,578
  100,534
  112,226
  124,640
  137,758
  151,567
  166,058
  181,220
  196,696
  213,203
  230,389
  248,266
  266,846
  286,152
  306,209
  327,042
  348,686
  371,179
  394,559
  418,872
  444,165
  470,491
  497,903
  526,463
  556,232
  587,276
  619,665
  653,471
Operating income, $m
  2,378
  4,659
  7,553
  10,711
  14,129
  17,798
  21,713
  25,868
  30,258
  34,878
  39,726
  45,158
  50,458
  55,987
  61,748
  67,745
  73,986
  80,480
  87,235
  94,263
  101,578
  109,193
  117,123
  125,385
  133,999
  142,982
  152,355
  162,142
  172,363
  183,045
  194,214
EBITDA, $m
  4,379
  7,072
  10,305
  13,832
  17,644
  21,737
  26,102
  30,732
  35,623
  40,769
  46,168
  51,817
  57,718
  63,872
  70,284
  76,958
  83,903
  91,127
  98,642
  106,460
  114,595
  123,063
  131,881
  141,068
  150,643
  160,628
  171,046
  181,921
  193,279
  205,148
  217,554
Interest expense (income), $m
  478
  443
  673
  925
  1,198
  1,491
  1,805
  2,139
  2,492
  2,864
  3,255
  3,664
  4,091
  4,537
  5,001
  5,484
  5,986
  6,508
  7,051
  7,615
  8,201
  8,810
  9,443
  10,102
  10,788
  11,502
  12,246
  13,021
  13,830
  14,673
  15,553
Earnings before tax, $m
  1,822
  4,217
  6,880
  9,787
  12,931
  16,307
  19,908
  23,729
  27,766
  32,014
  36,471
  41,495
  46,368
  51,451
  56,747
  62,261
  68,000
  73,971
  80,184
  86,649
  93,377
  100,383
  107,679
  115,283
  123,211
  131,480
  140,109
  149,120
  158,534
  168,373
  178,661
Tax expense, $m
  609
  1,138
  1,858
  2,642
  3,491
  4,403
  5,375
  6,407
  7,497
  8,644
  9,847
  11,204
  12,519
  13,892
  15,322
  16,811
  18,360
  19,972
  21,650
  23,395
  25,212
  27,103
  29,073
  31,126
  33,267
  35,499
  37,830
  40,262
  42,804
  45,461
  48,238
Net income, $m
  1,174
  3,078
  5,023
  7,144
  9,440
  11,904
  14,533
  17,322
  20,269
  23,370
  26,624
  30,291
  33,848
  37,559
  41,425
  45,451
  49,640
  53,999
  58,534
  63,254
  68,165
  73,279
  78,606
  84,157
  89,944
  95,980
  102,280
  108,858
  115,730
  122,912
  130,422

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
  51,275
  59,746
  68,927
  78,805
  89,364
  100,586
  112,458
  124,966
  138,100
  151,853
  166,223
  181,211
  196,823
  213,067
  229,960
  247,518
  265,765
  284,726
  304,433
  324,919
  346,221
  368,381
  391,443
  415,456
  440,471
  466,542
  493,728
  522,089
  551,691
  582,601
Adjusted assets (=assets-cash), $m
  43,526
  51,275
  59,746
  68,927
  78,805
  89,364
  100,586
  112,458
  124,966
  138,100
  151,853
  166,223
  181,211
  196,823
  213,067
  229,960
  247,518
  265,765
  284,726
  304,433
  324,919
  346,221
  368,381
  391,443
  415,456
  440,471
  466,542
  493,728
  522,089
  551,691
  582,601
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
  29,991
  34,946
  40,316
  46,094
  52,270
  58,834
  65,778
  73,094
  80,776
  88,820
  97,226
  105,992
  115,123
  124,625
  134,506
  144,776
  155,449
  166,539
  178,066
  190,048
  202,508
  215,470
  228,959
  243,005
  257,636
  272,885
  288,786
  305,375
  322,689
  340,769
Working capital, $m
  3,255
  2,835
  3,303
  3,811
  4,357
  4,941
  5,561
  6,218
  6,909
  7,636
  8,396
  9,190
  10,019
  10,882
  11,780
  12,714
  13,685
  14,694
  15,743
  16,832
  17,965
  19,143
  20,368
  21,643
  22,971
  24,354
  25,795
  27,298
  28,866
  30,503
  32,212
Total debt, $m
  10,572
  16,019
  22,016
  28,517
  35,510
  42,986
  50,931
  59,336
  68,192
  77,491
  87,228
  97,402
  108,013
  119,066
  130,568
  142,528
  154,959
  167,878
  181,302
  195,255
  209,758
  224,840
  240,530
  256,858
  273,859
  291,569
  310,028
  329,275
  349,355
  370,313
  392,198
Total liabilities, $m
  30,856
  36,303
  42,300
  48,801
  55,794
  63,270
  71,215
  79,620
  88,476
  97,775
  107,512
  117,686
  128,297
  139,350
  150,852
  162,812
  175,243
  188,162
  201,586
  215,539
  230,042
  245,124
  260,814
  277,142
  294,143
  311,853
  330,312
  349,559
  369,639
  390,597
  412,482
Total equity, $m
  13,557
  14,972
  17,446
  20,127
  23,011
  26,094
  29,371
  32,838
  36,490
  40,325
  44,341
  48,537
  52,914
  57,472
  62,216
  67,148
  72,275
  77,603
  83,140
  88,894
  94,876
  101,096
  107,567
  114,301
  121,313
  128,618
  136,230
  144,168
  152,450
  161,094
  170,120
Total liabilities and equity, $m
  44,413
  51,275
  59,746
  68,928
  78,805
  89,364
  100,586
  112,458
  124,966
  138,100
  151,853
  166,223
  181,211
  196,822
  213,068
  229,960
  247,518
  265,765
  284,726
  304,433
  324,918
  346,220
  368,381
  391,443
  415,456
  440,471
  466,542
  493,727
  522,089
  551,691
  582,602
Debt-to-equity ratio
  0.780
  1.070
  1.260
  1.420
  1.540
  1.650
  1.730
  1.810
  1.870
  1.920
  1.970
  2.010
  2.040
  2.070
  2.100
  2.120
  2.140
  2.160
  2.180
  2.200
  2.210
  2.220
  2.240
  2.250
  2.260
  2.270
  2.280
  2.280
  2.290
  2.300
  2.310
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
  3,078
  5,023
  7,144
  9,440
  11,904
  14,533
  17,322
  20,269
  23,370
  26,624
  30,291
  33,848
  37,559
  41,425
  45,451
  49,640
  53,999
  58,534
  63,254
  68,165
  73,279
  78,606
  84,157
  89,944
  95,980
  102,280
  108,858
  115,730
  122,912
  130,422
Depreciation, amort., depletion, $m
  2,001
  2,413
  2,752
  3,120
  3,516
  3,939
  4,388
  4,864
  5,365
  5,891
  6,442
  6,659
  7,260
  7,885
  8,536
  9,213
  9,916
  10,647
  11,407
  12,196
  13,017
  13,870
  14,758
  15,682
  16,644
  17,646
  18,691
  19,780
  20,916
  22,102
  23,340
Funds from operations, $m
  4,131
  5,491
  7,775
  10,264
  12,955
  15,843
  18,921
  22,186
  25,634
  29,261
  33,066
  36,950
  41,108
  45,444
  49,961
  54,663
  59,556
  64,646
  69,941
  75,450
  81,182
  87,150
  93,364
  99,839
  106,588
  113,626
  120,971
  128,638
  136,646
  145,014
  153,763
Change in working capital, $m
  145
  428
  468
  508
  546
  584
  620
  656
  692
  726
  760
  795
  829
  863
  898
  934
  971
  1,009
  1,048
  1,090
  1,133
  1,178
  1,225
  1,275
  1,328
  1,383
  1,441
  1,503
  1,568
  1,637
  1,709
Cash from operations, $m
  3,986
  5,063
  7,307
  9,757
  12,409
  15,259
  18,301
  21,530
  24,943
  28,535
  32,306
  36,156
  40,279
  44,581
  49,063
  53,730
  58,586
  63,637
  68,893
  74,360
  80,050
  85,972
  92,139
  98,564
  105,260
  112,243
  119,529
  127,135
  135,078
  143,377
  152,054
Maintenance CAPEX, $m
  0
  -1,744
  -2,054
  -2,394
  -2,761
  -3,157
  -3,580
  -4,030
  -4,505
  -5,006
  -5,533
  -6,084
  -6,659
  -7,260
  -7,885
  -8,536
  -9,213
  -9,916
  -10,647
  -11,407
  -12,196
  -13,017
  -13,870
  -14,758
  -15,682
  -16,644
  -17,646
  -18,691
  -19,780
  -20,916
  -22,102
New CAPEX, $m
  -2,892
  -4,527
  -4,955
  -5,370
  -5,778
  -6,176
  -6,564
  -6,944
  -7,316
  -7,682
  -8,044
  -8,405
  -8,767
  -9,131
  -9,502
  -9,881
  -10,270
  -10,673
  -11,091
  -11,527
  -11,982
  -12,460
  -12,962
  -13,489
  -14,045
  -14,631
  -15,249
  -15,901
  -16,589
  -17,314
  -18,080
Cash from investing activities, $m
  -2,941
  -6,271
  -7,009
  -7,764
  -8,539
  -9,333
  -10,144
  -10,974
  -11,821
  -12,688
  -13,577
  -14,489
  -15,426
  -16,391
  -17,387
  -18,417
  -19,483
  -20,589
  -21,738
  -22,934
  -24,178
  -25,477
  -26,832
  -28,247
  -29,727
  -31,275
  -32,895
  -34,592
  -36,369
  -38,230
  -40,182
Free cash flow, $m
  1,045
  -1,208
  298
  1,993
  3,870
  5,926
  8,156
  10,556
  13,121
  15,847
  18,729
  21,667
  24,853
  28,190
  31,676
  35,313
  39,103
  43,049
  47,155
  51,427
  55,871
  60,495
  65,307
  70,316
  75,533
  80,968
  86,634
  92,543
  98,709
  105,147
  111,872
Issuance/(repayment) of debt, $m
  -1,405
  5,475
  5,997
  6,501
  6,994
  7,475
  7,946
  8,405
  8,856
  9,299
  9,737
  10,174
  10,611
  11,053
  11,501
  11,960
  12,431
  12,919
  13,425
  13,952
  14,504
  15,082
  15,689
  16,328
  17,001
  17,710
  18,458
  19,247
  20,080
  20,958
  21,885
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
  5,475
  5,997
  6,501
  6,994
  7,475
  7,946
  8,405
  8,856
  9,299
  9,737
  10,174
  10,611
  11,053
  11,501
  11,960
  12,431
  12,919
  13,425
  13,952
  14,504
  15,082
  15,689
  16,328
  17,001
  17,710
  18,458
  19,247
  20,080
  20,958
  21,885
Total cash flow (excl. dividends), $m
  479
  4,266
  6,295
  8,493
  10,864
  13,401
  16,102
  18,961
  21,977
  25,145
  28,466
  31,841
  35,465
  39,243
  43,177
  47,273
  51,534
  55,967
  60,580
  65,379
  70,375
  75,577
  80,996
  86,644
  92,534
  98,678
  105,092
  111,790
  118,789
  126,105
  133,756
Retained Cash Flow (-), $m
  -320
  -2,274
  -2,473
  -2,681
  -2,884
  -3,083
  -3,277
  -3,467
  -3,652
  -3,835
  -4,016
  -4,196
  -4,376
  -4,559
  -4,744
  -4,933
  -5,127
  -5,328
  -5,537
  -5,754
  -5,982
  -6,220
  -6,471
  -6,734
  -7,012
  -7,304
  -7,613
  -7,938
  -8,281
  -8,644
  -9,026
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
 
  2,851
  3,822
  5,812
  7,979
  10,318
  12,825
  15,495
  18,325
  21,310
  24,450
  27,645
  31,088
  34,684
  38,434
  42,340
  46,407
  50,639
  55,043
  59,625
  64,393
  69,357
  74,525
  79,910
  85,522
  91,374
  97,479
  103,852
  110,507
  117,461
  124,730
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
 
  2,692
  3,389
  4,811
  6,126
  7,298
  8,296
  9,096
  9,682
  10,044
  10,184
  10,075
  9,808
  9,366
  8,777
  8,073
  7,288
  6,458
  5,613
  4,785
  3,997
  3,271
  2,620
  2,052
  1,571
  1,174
  855
  607
  419
  281
  183
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 29.9
Price to Sales 0.6
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 8.8
Price to Free Cash Flow 32.1
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 17.8% 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 491.513 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 $32.7 billion.

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COMPANY NEWS

▶ 6 Big Name Stocks Hedge Fund Managers Are Selling   [Feb-21-18 10:14AM  Benzinga]
▶ U.S. senator's biofuel overhaul faces resistance   [Feb-16-18 10:54AM  Reuters]
▶ 3 Top Energy Stocks to Buy in February   [Feb-10-18 03:19PM  Motley Fool]
▶ 3 Top Oil Stocks to Buy in February   [11:32AM  Motley Fool]
▶ This Energy ETF Should Get A Tax Reform Boost   [Feb-09-18 02:51PM  Benzinga]
▶ Cramers Exec Cut: Tackling taxes   [Feb-02-18 07:39PM  CNBC Videos]
▶ Cramer Remix: How you should approach Alphabets earnings   [Feb-01-18 07:06PM  CNBC Videos]
▶ Marathon Petroleum tops Street 4Q forecasts   [07:01AM  Associated Press]
▶ First Eagle Fund of America 4th Quarter Commentary   [Jan-29-18 05:39PM  GuruFocus.com]
▶ Whats behind Marathon Petroleums Significant Rise in 2017?   [Jan-25-18 04:15PM  Market Realist]
▶ What to Expect from Phillips 66s 4Q17 Results   [08:14AM  Market Realist]
▶ S&P 500 Beats 54-Year Old Record: Top 5 Gainers   [Jan-24-18 09:07AM  Zacks]
▶ What Valeros 4Q Crack Indicators Suggest   [Jan-23-18 03:35PM  Market Realist]
▶ Gauging Short Interest in MPC ahead of 4Q17 Earnings   [Jan-19-18 09:02AM  Market Realist]
▶ MPCs Refining Earnings Outlook for 4Q17   [Jan-17-18 05:00PM  Market Realist]
▶ Bernard Horn Comments on Marathon Petroleum   [12:49PM  GuruFocus.com]
▶ New Strong Buy Stocks for January 16th   [Jan-16-18 09:56AM  Zacks]
▶ MPC, ANDV, VLO, PSX: A Look at Refiners Valuations   [Jan-12-18 09:02AM  Market Realist]
▶ Will Valeros Refining Margins Surge in 4Q17?   [07:30AM  Market Realist]
▶ 3 Fast-Growing Dividend Stocks for 2018   [Jan-11-18 03:36PM  Motley Fool]
▶ Refiners Valuations for MPC, ANDV, VLO, and PSX   [Jan-10-18 10:31AM  Market Realist]
▶ 3 Top Energy Stocks to Buy in January   [06:15AM  Motley Fool]
▶ Oil Refinery Stocks Are Up 30%   [Jan-08-18 08:15PM  Motley Fool]
▶ Analyzing Wall Street Targets for MPC, PARR, CVE, and XOM   [Jan-05-18 10:45AM  Market Realist]
▶ How MPCs Marketing Segment Is Performing   [Dec-27-17 07:30AM  Market Realist]
▶ Have MPCs Refining Yields Improved in 3Q17?   [Dec-26-17 10:30AM  Market Realist]
▶ Why Marathon Petroleums Refining Margin Rose   [07:30AM  Market Realist]
Financial statements of MPC
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