Critical Analysis: Marathon Petroleum (NYSE:MPC) versus Par Pacific (NYSE:PARR)

Par Pacific (NYSE:PARR) and Marathon Petroleum (NYSE:MPC) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.

Earnings & Valuation

This table compares Par Pacific and Marathon Petroleum”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Par Pacific	$7.46 billion	0.49	$369.39 million	$17.14	4.30
Marathon Petroleum	$153.58 billion	0.84	$4.05 billion	$29.09	15.13

Marathon Petroleum has higher revenue and earnings than Par Pacific. Par Pacific is trading at a lower price-to-earnings ratio than Marathon Petroleum, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Par Pacific and Marathon Petroleum, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Par Pacific	0	4	8	1	2.77
Marathon Petroleum	0	5	11	1	2.76

Par Pacific currently has a consensus price target of $90.43, suggesting a potential upside of 22.70%. Marathon Petroleum has a consensus price target of $424.31, suggesting a potential downside of 3.62%. Given Par Pacific’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Par Pacific is more favorable than Marathon Petroleum.

Profitability

This table compares Par Pacific and Marathon Petroleum’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Par Pacific	9.94%	56.19%	21.61%
Marathon Petroleum	5.48%	31.96%	8.88%

Institutional and Insider Ownership

92.2% of Par Pacific shares are held by institutional investors. Comparatively, 76.8% of Marathon Petroleum shares are held by institutional investors. 3.6% of Par Pacific shares are held by insiders. Comparatively, 0.2% of Marathon Petroleum shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Par Pacific has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Marathon Petroleum has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Summary

Par Pacific beats Marathon Petroleum on 8 of the 14 factors compared between the two stocks.

About Par Pacific

Par Pacific Holdings, Inc. owns and operates energy and infrastructure businesses. The company operates through Refining, Retail, and Logistics segments. The Refining segment owns and operates refineries that produce gasoline, distillate, asphalt, and other products primarily for consumption in Kapolei, Hawaii, Newcastle, Wyoming, Tacoma, Washington, and Billings, Montana. The Retail segment operates fuel retail outlets, which sell merchandise, such as soft drinks, prepared foods, and other sundries in Hawaii under the Hele, 76, and nomnom brands; and gasoline, diesel, and retail merchandise in Washington and Idaho. The Logistics segment owns and operates terminals, pipelines, single point mooring, marine vessels, storage facilities, loading and truck racks, and rail facilities to distribute ethanol, petroleum, and refined products throughout Hawaii, the United States West Coast, Washington, the Dakotas, and Wyoming; and a jet fuel storage facility and pipeline that serves Ellsworth Air Force Base in South Dakota. It also holds interest in refined products pipeline. In addition, the company owns and operates a marine terminal, a unit train-capable rail loading terminal; a truck rack, and a proprietary pipeline that serves Joint Base Lewis McChord. The company was formerly known as Par Petroleum Corporation and changed its name to Par Pacific Holdings, Inc. in October 2015. Par Pacific Holdings, Inc. was incorporated in 1984 and is headquartered in Houston, Texas.

About Marathon Petroleum

Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. The company operates through Refining & Marketing, and Midstream segments. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States; and purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services. Its refined products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. This segment also manufactures propane and petrochemicals. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market, and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand. The Midstream segment transports, stores, distributes, and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats, and barges; gathers, processes, and transports natural gas; and gathers, transports, fractionates, stores, and markets natural gas liquids. Marathon Petroleum Corporation was founded in 1887 and is headquartered in Findlay, Ohio.