Key Takeaways
- Marathon Petroleum fell 10% today after Democrats won control of the Senate, and Valero, HF Sinclair and Phillips 66 fell with it.
- The selloff came a day after Marathon reported a huge third-quarter beat.
- Before today’s drop, Marathon traded at 5.3x forward earnings, less than half its five-year average.
- Investors are pricing in a policy risk Marathon’s numbers don’t show; watch what the new Senate does on fuel rules.
Marathon Petroleum (MPC) sank 10% today, a day after it reported a blowout quarter. Democrats won control of the Senate in Tuesday’s midterms, and oil stocks sold off even as the broad market rallied.
Refiners fell hardest. Valero Energy (VLO) fell 8%, HF Sinclair (DINO) lost 9% and Phillips 66 (PSX) dropped 6%.
The quarter was a blowout
Marathon earned an adjusted $26.93 a share in the third quarter, up from $3.01 a year earlier.
Before the report, analysts expected a huge 2026, with earnings stepping down after it:
That one quarter is already about 40% of the full-year consensus, and Tuesday’s election doesn’t change what Marathon’s refineries earned.
Washington is the worry
My read: investors fear tougher fuel rules. Marathon spent $654 million on renewable fuel credits (RINs) last quarter, up from $212 million a year earlier, its quarterly report says. But the EPA sets those rules, and the White House isn’t changing hands.
Even before today, Marathon traded at less than half its usual multiple:
At today’s price it’s even lower, around its July 2022 low of 5.1x. Some discount makes sense, since analysts see 2028 earnings at about half of this year’s.
TIKR tracks 19 analysts on Marathon Petroleum. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Marathon Petroleum, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Marathon Petroleum’s Analyst Ratings
The rest of the refiners
Valero’s quarter looked a lot like Marathon’s: adjusted earnings of $23.90 a share, up from $3.66. It’s also buying LyondellBasell’s former Houston refinery for $320.5 million, hardly the move of a company bracing for Washington.
HF Sinclair depends on the fuel rules even more. Its adjusted refinery gross margin nearly tripled to $54.22 a barrel, and its release says small refinery waivers from the EPA were part of the reason. It traded at just 4.9x forward earnings before today.
Phillips 66 has midstream and chemicals businesses, but refining made about four-fifths of its segments’ pre-tax earnings last quarter, so that cushion is thin.
The business didn’t change
Frankly, I think investors sold Marathon on a headline. With the $459 consensus target well above where today leaves the stock, this drop looks like an opening to me.
Of course, margins this high won’t last forever. And if the new Senate goes after refiners once it’s seated in January, the discount could stick.
So what is Marathon Petroleum stock actually worth?
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