• Investors may be considering whether Marathon Petroleum, at a recent close of US$222.62, still offers value or if most of the opportunity has already been priced in.
• The stock has seen a 7.9% decline over the past 7 days and a 1.8% decline over the past 30 days, but is up 34.8% year to date and 84.2% over the last year. These moves can influence how the market views both its potential and its risks.
• Recent coverage has focused on Marathon Petroleum as an established refiner in the US energy sector, with attention on how the company is positioned within the broader oil and gas industry and its capital allocation choices. This context helps frame how investors interpret the strong 3-year return of 81.6% and the very large 5-year return of 364.6%.
• Marathon Petroleum currently has a valuation score of 4/6, which supports a closer look at traditional methods such as the price-to-earnings ratio and discounted cash flow analysis. An even more comprehensive way to think about valuation will be introduced at the end of this article.

Approach 1: Marathon Petroleum Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company could be worth by projecting its future cash flows and discounting them back to today’s dollars. It focuses on what you are ultimately paying for, the cash the business may generate over time.

For Marathon Petroleum, the model used is a 2 Stage Free Cash Flow to Equity approach, based on last twelve months free cash flow of about $5.76b. Analyst projections and Simply Wall St extrapolations suggest free cash flow figures such as $7.55b in 2026 and $5.94b in 2030, all expressed in $. These values are discounted using the model’s assumptions to reflect their value in today’s terms.

Pulling this together, the DCF output points to an estimated intrinsic value of about $404 per share, compared with the recent share price of $222.62. That gap implies an intrinsic discount of 44.9%, which indicates the shares are currently assessed as undervalued under this specific model and its inputs.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Marathon Petroleum is undervalued by 44.9%. Track this in your watchlist or portfolio, or discover 59 more high quality undervalued stocks.

Approach 2: Marathon Petroleum Price vs Earnings

For a profitable company like Marathon Petroleum, the P/E ratio is a useful way to connect what you pay for each share with the earnings that support that price. Investors usually expect higher P/E ratios when they see stronger growth potential and lower perceived risk, and lower P/E ratios when growth expectations are more modest or risks are higher.

Marathon Petroleum currently trades on a P/E of 16.2x. This sits above the Oil and Gas industry average of about 14.8x, but below the peer group average of 22.9x. On the surface, that puts the stock somewhere between broader industry pricing and closer peers that trade at higher earnings multiples.

Simply Wall St also provides a Fair Ratio of 22.8x for Marathon Petroleum. This is a proprietary estimate of what the P/E might be given factors such as earnings growth, profit margins, industry, market cap and risk profile. Because it blends these company specific elements, it can be more tailored than a simple comparison with industry or peer averages. Comparing the Fair Ratio of 22.8x with the current P/E of 16.2x indicates that, on this metric, the shares are currently assessed as undervalued.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Marathon Petroleum Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives bring your view of Marathon Petroleum together with the numbers by linking a simple story about the business to a forecast for revenue, earnings and margins, then to a Fair Value that you can compare with the current share price.

On Simply Wall St’s Community page, Narratives let you set out that story in an accessible format, so you can see in one place whether your assumptions lead you closer to a Fair Value near the more bullish end around US$331.0 or closer to the cautious end around US$163.0, and use that comparison to decide whether the stock looks expensive or inexpensive against your own view.

Because Narratives update when new information such as earnings, news or analyst revisions is available, you can track how your Marathon Petroleum thesis changes over time rather than relying only on static DCFs or P/E checks.

For Marathon Petroleum, however, we will make it really easy for you with previews of two leading Marathon Petroleum Narratives:

First up is a higher conviction bull view that lines up with analysts at the optimistic end of the range, followed by a more cautious bear view that leans toward lower earnings and revenue outcomes.

Fair Value: US$318.81

Discount to Fair Value: 30.2% compared with the recent price of US$222.62

Revenue Growth Assumption: 4.16% per year

• Focuses on refinery upgrades, sour crude processing and branded retail expansion that are aimed at supporting utilization, margins and free cash flow.
• Leans on bullish analyst assumptions that revenue grows 4.2% annually, margins widen from 3.0% to 5.7%, and earnings reach US$8.6b by 2029 on a lower future P/E of 11.9x.
• Arrives at a Fair Value of about US$318.81, with the view that investors should weigh project execution, product demand and MPLX cash generation against these higher expectations.

Fair Value: US$163.00

Premium to Fair Value: 36.6% compared with the recent price of US$222.62

Revenue Growth Assumption: 2.23% annual revenue decline

• Highlights the risk that refining projects geared to tight capacity and export gasoline demand could earn below targeted returns if product markets loosen or demand softens.
• Uses bearish analyst assumptions that revenue declines 2.2% annually, margins compress from 3.0% to 2.7%, and earnings step down to US$3.4b by 2029 on a future P/E of 15.4x.
• Points to a Fair Value of about US$163.00 and emphasizes sensitivity to sour crude differentials, MPLX growth economics and the reliability of Midstream distributions to support capital returns.

Taken together, these Narratives frame the current share price between a bullish Fair Value well above today’s level and a bearish Fair Value well below it. Your own view on refining projects, sour crude exposure and MPLX growth will largely determine which story feels closer to your expectations.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Marathon Petroleum on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Marathon Petroleum? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.