Marathon Petroleum (NYSE:MPC) and Phillips 66 (NYSE:PSX) are both large-cap oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, profitability, institutional ownership, valuation and risk.
Dividends
Marathon Petroleum pays an annual dividend of $2.32 per share and has a dividend yield of 4.2%. Phillips 66 pays an annual dividend of $3.60 per share and has a dividend yield of 4.3%. Marathon Petroleum pays out 47.0% of its earnings in the form of a dividend. Phillips 66 pays out 44.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Marathon Petroleum has increased its dividend for 1 consecutive years and Phillips 66 has increased its dividend for 1 consecutive years. Phillips 66 is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a breakdown of current recommendations for Marathon Petroleum and Phillips 66, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Marathon Petroleum | 1 | 4 | 12 | 0 | 2.65 |
| Phillips 66 | 0 | 3 | 15 | 0 | 2.83 |
Marathon Petroleum currently has a consensus target price of $47.80, indicating a potential downside of 12.49%. Phillips 66 has a consensus target price of $73.2353, indicating a potential downside of 11.82%. Given Phillips 66's stronger consensus rating and higher probable upside, analysts clearly believe Phillips 66 is more favorable than Marathon Petroleum.
Earnings and Valuation
This table compares Marathon Petroleum and Phillips 66's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Marathon Petroleum | $124.88 billion | 0.28 | $2.64 billion | $4.94 | 11.06 |
| Phillips 66 | $109.56 billion | 0.33 | $3.08 billion | $8.05 | 10.32 |
Phillips 66 has lower revenue, but higher earnings than Marathon Petroleum. Phillips 66 is trading at a lower price-to-earnings ratio than Marathon Petroleum, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Marathon Petroleum and Phillips 66's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Marathon Petroleum | -11.11% | -1.81% | -0.68% |
| Phillips 66 | -3.45% | 3.38% | 1.47% |
Volatility & Risk
Marathon Petroleum has a beta of 2.24, indicating that its stock price is 124% more volatile than the S&P 500. Comparatively, Phillips 66 has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500.
Institutional and Insider Ownership
73.7% of Marathon Petroleum shares are owned by institutional investors. Comparatively, 64.6% of Phillips 66 shares are owned by institutional investors. 0.8% of Marathon Petroleum shares are owned by insiders. Comparatively, 0.6% of Phillips 66 shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Phillips 66 beats Marathon Petroleum on 11 of the 16 factors compared between the two stocks.
