MPC 165.46 (+0.71%)
US56585A1025Oil & GasOil & Gas Refining & Marketing

Last update on 2024-06-07

Marathon Petroleum (MPC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Marathon Petroleum (MPC) Piotroski F-Score Analysis 2023 highlights the company's financial strengths and weaknesses. Final Score: 4/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Marathon Petroleum (MPC) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Marathon Petroleum (MPC) was evaluated using the Piotroski F-Score, which is a measure ranging from 0 to 9 assessing a company's financial strength using 9 different criteria. MPC scored a 4 out of 9, indicating a mixed financial health profile. The analysis considered profitability, liquidity, and efficiency. Key positive points included strong net income and cash flow from operations, non-dilution of shares, and operating cash flow exceeding net income. However, there were concerns regarding declining return on assets, increased financial leverage, decreasing current ratio, and a drop in gross margin and asset turnover.

Insights for Value Investors Seeking Stable Income

Given MPC's score of 4 out of 9, it demonstrates moderate, but not stellar, financial health. Investors should be cautious. Some positives, like strong cash flows and a reduction in outstanding shares, suggest robustness. However, declining return on assets, rising leverage, and decreasing profitability metrics indicate areas of concern. Investors may want to thoroughly review MPC's future growth prospects and consider potential risks before making a decision. It may be worth keeping an eye on this stock but approach with caution.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Marathon Petroleum (MPC)

Company has a positive net income?

Net income measures a company's profitability and is a critical indicator of financial health. A positive net income indicates that the company is generating more revenue than expenses.

Historical Net Income of Marathon Petroleum (MPC)

For Marathon Petroleum (MPC), the net income in 2023 is $9,681,000,000. This is a significantly positive value, deserving of a full point under the Piotroski Analysis. Reviewing the past 20 years, it's evident that the net income has been fluctuating. The company faced a severe loss in 2020 with -$9,826,000,000, but it remarkably rebounded with strong positive figures of $9,738,000,000 in 2021 and $14,516,000,000 in 2022. The positive net income in 2023 represents continued profitability, which is a promising sign for investors.

Company has a positive cash flow?

Cash Flow from Operations (CFO) depicts the cash inflow and outflow directly from core operational activities.

Historical Operating Cash Flow of Marathon Petroleum (MPC)

For Marathon Petroleum (MPC), the cash flow from operations (CFO) in 2023 stands at $14.117 billion. This is a significant figure and, more importantly, it is positive. This is crucial because positive CFO indicates that the company is effectively generating plenty of cash from its core operations. Given that companies need cash to fuel further growth, pay dividends or reduce debt, this is a positive criterion. Therefore, MPC earns 1 point for this criterion. Over the last 20 years, the CFO has exhibited a fluctuating but generally upward trend with notable spikes in 2022 and 2023, indicating sustained operational efficiency in recent times. This positive trend fosters confidence among investors.

Return on Assets (ROA) are growing?

Change in return on assets (ROA) measures the improvement in profitability and efficiency of a company in using its assets to generate earnings.

Historical change in Return on Assets (ROA) of Marathon Petroleum (MPC)

The Return on Assets (ROA) for Marathon Petroleum (MPC) has declined from 0.1656 in 2022 to 0.1101 in 2023. This represents a decrease, thus scoring 0 points based on Piotroski's criterion for change in ROA. A declining ROA is generally seen as negative, as it indicates the company's assets are generating less profit compared to the previous year. Over the last 20 years, the industry median ROA has averaged around 0.078, peaking at 0.1005 in 2016 and hitting a low of 0.0528 in 2013. MPC’s ROA has been quite volatile, with substantial drops and significant highs, such as its 2022 peak. In 2023, the operating cash flow of $14.12 billion also reflects a decline from 2022's $16.361 billion. The reduced ROA in 2023 indicates less efficient use of assets during this period, and when compared with industry averages, it suggests a below-par year for MPC in terms of asset efficiency.

Operating Cashflow are higher than Netincome?

This criterion looks at whether operating cash flow is greater than net income over the same period. It’s important because strong cash flow compared to net income indicates good quality earnings.

Historical accruals of Marathon Petroleum (MPC)

In 2023, Marathon Petroleum (MPC) reported an operating cash flow of $14.117 billion, compared to a net income of $9.681 billion. Since the operating cash flow exceeds the net income, we can assign 1 point for this criterion. Examining the historical data, MPC has often shown a pattern where operating cash flow is greater than net income, underlining the robustness of their cash operations. For instance, in 2022, the operating cash flow was $16.361 billion against a net income of $14.516 billion. This consistent pattern of healthy operational cash flows supports the reliability and quality of MPC's earnings. This trend is favorable and indicates a strong operational efficiency, contributing to quality earnings. The overall strong cash flow figures further affirm the company’s superior standing in terms of liquidity and operational performance.

Liquidity of Marathon Petroleum (MPC)

Leverage is declining?

Change in Leverage determines the variation in financial leverage, indicating risk levels and stability.

Historical leverage of Marathon Petroleum (MPC)

The leverages in 2022 and 2023 were 0.2945 and 0.3035, respectively. An increase in leverage is apparent from these values, indicating a higher degree of financial risk for Marathon Petroleum. This trend could suggest a higher reliance on debt for its financing. Historical leverage data, which shows a general increasing trend with peaks and troughs, reflects the cyclicality and perhaps strategic funding decisions of the company over the years. Hence, this criterion scores 0 points due to higher leverage in 2023.

Current Ratio is growing?

Current Ratio measures a company's ability to pay short-term obligations with its current assets. An increasing Current Ratio indicates improved liquidity and solvency.

Historical Current Ratio of Marathon Petroleum (MPC)

The Current Ratio for Marathon Petroleum (MPC) decreased from 1.7603 in 2022 to 1.5946 in 2023. This marks a slight reduction in the company's liquidity position year-over-year. With a Current Ratio below 1.76, MPC did not achieve the necessary growth this criterion demands. In the context of historical performance, while MPC's Current Ratio has been volatile over the past 15 years, the trend for 2023 was not in line with this criterion's threshold for adding a point.

Number of shares not diluted?

Changes in the number of shares outstanding can significantly impact existing shareholders

Historical outstanding shares of Marathon Petroleum (MPC)

In 2023, Marathon Petroleum (MPC) reported a decrease in outstanding shares to 407,000,000 from 512,000,000 in 2022. This reduction of approximately 105,000,000 shares is notable and aligns with a broader trend over the last 20 years, where the company has strategically reduced its outstanding shares from a peak of 716,000,000 in 2008. A decreasing number of shares outstanding typically signals potential share buybacks, which can indicate the company's robust financial health and a commitment to returning value to shareholders. This results in a +1 for this Piotroski criterion, indicating a positive trend.

Operating of Marathon Petroleum (MPC)

Cross Margin is growing?

Change in Gross Margin assesses a firm's profitability improvement or decline over time. It's an indicator of a company's operational efficiency and pricing strategy effectiveness.

Historical gross margin of Marathon Petroleum (MPC)

Comparing the gross margin of 0.1112 in 2023 with 0.1272 in 2022, Marathon Petroleum's gross margin has decreased. Thus, MPC does not score a point for this criterion. Over the past 20 years, Marathon’s gross margin has shown fluctuations with a notably low gross margin in 2020 (0.0096) and a peak in 2016 (0.1963). The industry's median gross margin has generally been more stable, indicating Marathon's higher volatility. Marathon's current gross margin (0.1112) is still higher than the industry median (0.0872).

Asset Turnover Ratio is growing?

The change in Asset Turnover measures the efficiency of a company's use of its assets in generating sales revenue. A higher ratio indicates better performance.

Historical asset turnover ratio of Marathon Petroleum (MPC)

Comparing the Asset Turnover of 1.6872 in 2023 to 2.0248 in 2022, we observe a decrease, setting the point to 0. This indicates a drop in efficiency in asset utilization. Historically, since 2008, the Asset Turnover peaked in 2013 at 3.6024, and has seen varied fluctuations with notable drops in 2020 during the pandemic. The reduced Asset Turnover in 2023 suggests a potential area for performance improvement in asset management.


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