Suncor Energy (SU) versus Marathon Petroleum (MPC) Critical Survey

Suncor Energy (NYSE: SU) and Marathon Petroleum (NYSE:MPC) are both large-cap energy companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.

Volatility and Risk

Suncor Energy has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Marathon Petroleum has a beta of 1.5, suggesting that its stock price is 50% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Suncor Energy and Marathon Petroleum, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Suncor Energy 0 3 9 1 2.85
Marathon Petroleum 0 5 8 0 2.62

Suncor Energy presently has a consensus target price of $47.25, indicating a potential upside of 44.14%. Marathon Petroleum has a consensus target price of $74.30, indicating a potential upside of 18.33%. Given Suncor Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Suncor Energy is more favorable than Marathon Petroleum.

Profitability

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

Net Margins Return on Equity Return on Assets
Suncor Energy 11.63% 5.68% 2.91%
Marathon Petroleum 4.60% 10.04% 4.30%

Dividends

Suncor Energy pays an annual dividend of $1.01 per share and has a dividend yield of 3.1%. Marathon Petroleum pays an annual dividend of $1.60 per share and has a dividend yield of 2.5%. Suncor Energy pays out 58.7% of its earnings in the form of a dividend. Marathon Petroleum pays out 50.0% 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 raised its dividend for 7 consecutive years.

Earnings & Valuation

This table compares Suncor Energy and Marathon Petroleum’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Suncor Energy $20.20 billion 2.68 $327.75 million $1.72 19.06
Marathon Petroleum $75.37 billion 0.40 $3.43 billion $3.20 19.62

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

Institutional & Insider Ownership

65.8% of Suncor Energy shares are held by institutional investors. Comparatively, 80.8% of Marathon Petroleum shares are held by institutional investors. 1.0% of Suncor Energy shares are held by company insiders. Comparatively, 1.1% of Marathon Petroleum shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Marathon Petroleum beats Suncor Energy on 11 of the 18 factors compared between the two stocks.

About Suncor Energy

Suncor Energy Inc is a Canada-based integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its E&P segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Marketing operations. In addition, it explores for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. It transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. It markets third-party petroleum products. The Company also conducts energy trading activities.

About Marathon Petroleum

Marathon Petroleum Corporation is engaged in refining, marketing, retail and transportation businesses in the United States and the largest east of the Mississippi. The Company operates through three segments: Refining & Marketing; Speedway; and Midstream. The Refining & Marketing segment refines crude oil and other feedstocks at the Company’s seven refineries in the Gulf Coast and Midwest regions of the United States. Its Speedway segment sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States. The Company’s Midstream is engaged in the operations of MPLX LP and certain other related operations. It gathers, processes and transports natural gas, natural gas liquids (NGLs), crude oil and refined products. MPLX is a limited partnership which owns, operates, develops and acquires midstream energy infrastructure assets.

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