DCF Studio

    MPC · NYQ · Energy

    Marathon Petroleum Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 159.17

    Market price

    USD 424.89

    Implied upside

    -62.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 159.17-62.5%
    Exit multiple
    USD 272.63-35.8%
    Market price
    USD 424.89

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn7bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 120.4bnUSD 109.3bnUSD 99.2bnUSD 90.1bnUSD 81.8bn-9.2%
    EBITUSD 8.2bnUSD 7.5bnUSD 6.8bnUSD 6.1bnUSD 5.6bn-9.2%
    NOPATUSD 6.7bnUSD 6.1bnUSD 5.5bnUSD 5.0bnUSD 4.6bn-9.2%
    Add depreciation & amortisationUSD 2.7bnUSD 2.4bnUSD 2.2bnUSD 2.0bnUSD 1.8bn-9.2%
    Less capital expenditureUSD -2.1bnUSD -1.9bnUSD -1.8bnUSD -1.6bnUSD -1.4bn-9.2%
    Less increase in working capitalUSD 124.3mUSD 112.8mUSD 102.4mUSD 93.0mUSD 84.4m+9.2%
    Free cashflow to firmUSD 7.4bnUSD 6.7bnUSD 6.1bnUSD 5.5bnUSD 5.0bn-9.2%
    Discount factor0.96350.89450.83050.77100.7158-
    Present valueUSD 7.1bnUSD 6.0bnUSD 5.1bnUSD 4.3bnUSD 3.6bn-15.7%
    Present Value Of The ForecastUSD 26.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.683Reported 0.527, pulled toward 1.0 (Blume)
    Cost of equity8.75%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 119.3bn77.6% of capital
    Total debtUSD 34.4bn22.4% of capital, book value as a proxy
    Tax rate18.2%Effective, capped at statutory
    WACC7.71%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 159.17

    67% of EV

    Forecast FCFF, final year
    USD 5.0bn
    Capex at depreciation, working capital in reinvestment
    USD 4.6bn
    Less reinvestment at g/ROIC (17.0% of NOPAT)
    USD -775.9m
    Capitalised
    USD 3.8bn
    ROIC (reported)
    14.7%
    Terminal value, undiscounted
    USD 74.5bn
    Terminal value, discounted
    USD 53.3bn
    Enterprise value
    USD 79.4bn
    Less net debt
    USD 30.7bn
    Equity value
    USD 48.7bn

    Exit at 16.6x EBITDA

    Value per shareUSD 272.63

    77% of EV

    Terminal value, undiscounted
    USD 123.0bn
    Terminal value, discounted
    USD 88.1bn
    Enterprise value
    USD 114.1bn
    Less net debt
    USD 30.7bn
    Equity value
    USD 83.4bn

    Spread between methods: 53%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.71%239.84264.26296.17339.69402.71
    6.71%181.35194.89211.55232.59260.07
    7.71%141.54149.61159.17170.67184.82
    8.71%112.63117.67123.47130.21138.19
    9.71%90.6693.8997.52101.64106.37

    Outlined: this model. Green text: above today's price of 424.89. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-9.2%6.8%+16.1pp
    EBIT margin6.8%14.0%+7.2pp
    Discount rate7.7%4.9%-2.9pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.