Jim Cramer - Mad MoneyMarathon PetroleumMPCDON'T BUYDec 16, 2024

Buys back a lot of shares, reducing shares by 43% since end-2015. Refineries don't need higher oil prices to do well. Shares are up 240% over 10 years.

He just bought it. Since 2021, they've bought nearly half their shares. Been buying aggressively and will buy another $5.9 billion. They're printing cash by generating so much cash flow. They increased their dividend by 10% with a forward PE of 11x.

MPC is now trading at 8.2x times' Forward P/E. In the most recent quarter, MPC’s revenue declined 32% to $36.8B, beating estimates of $33.9B and adjusted EBITDA came down from $9B to around $4.5B; the decline was largely expected after high oil prices in 2022. The balance sheet is strong, with net debt of $17.1B and net debt/EBITDA of around 0.8x. Given the record cash flow generated from the oil tailwind in the last few years, the company has implemented one of the more aggressive share-repurchasing programs.  Going forward, MPC’s fundamentals and share price would be heavily affected by the movement in oil prices. However, we think MPC just had a solid quarter, and still looks cheap, while MPC is fully committed to buying back more shares. We would be comfortable buying in the context of the sector.
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When OPEC raises oil prices, it will hurt MPC's margin, but this is a cheap stock that's well run.

Sells at 5x earnings and Goldman recommended it today.

From a PE valuation standpoint, refiners tend to work together. You see spreads widen or narrow off the raw product of oil, into the different commercial products. This company has been a good performer over the years. Not having great visibility into the cycle and to the spreads, he would probably pass on making this a core holding.

He sees resistance around $51. The chart shows a double top in 2015. This is a good indicator that the 2^nd time the bulls tried to do it, they got exhausted. Currently the chart is showing a nice upward trend. He likes energy. If this breaks above $51, he would be keen to add.

You can expect resistance on this at around $42. It is now at $38, so it is reaching a Sell target zone. If there is any further rally, he would Sell.

With refiners, from late summer to end of Sept, this sector goes through a process. They shut down refineries and move into producing heating oil. Mid July until end of Sept is seasonal strength. Watch inventories of gas and heating oil.