re MPC - the stock is definitely cheap when look at the sum of parts (refining, midstream, gas retail), FCF yield or PE. I do think the merger with Andeavor destroyed shareholder value and it also lowered the quality of the entire company, because the acquired assets are of lower quality than the old MPC per merger ones.
Even before the merger with Andeavor, there were questionable capital allocation decisions with respect to MPLX for example, that went into NG gathering rather than just running dropdown logistic assets from MOC and the result is the $1.2B writeoff that occurred this quartet. So we have a history of bad capital allocation, presumable due to empire building.
Wehren I did. look at MPC a while ago, I also looked at peer company PSX, which imo is of far higher quality, both in terms of assets, but also asset quality. Just to pony this out, compare their captive MLP PSXP vs MPLX performance and it become clear who is the champ and who is the chump. I think everyone who looks at MPC should also look at PSX and see what suites them better. Sure, the valuation is a bit higher, but the balance sheet is in better shape and results are way more consistent with much less writeoffs. PSX is also what Buffet owned in this sector - he has sold out, but no matter, the old man is good at licking quality and I consider PSX having his seal of approval.
For someone with a more LT focus, I think PSX is the better deal and it’s a great dividend payer too - I bet they will raise the quarterly dividend to $1/ share.
End of rant. |
