Industry Overview - The Zacks Oil and Gas - Refining & Marketing industry includes companies that sell refined petroleum products and non-energy materials, operating terminals, storage facilities, and transportation services [2] - The primary activity involves buying crude and processing it into various refined products, with refining margins being highly volatile and influenced by inventories, demand, imports, and capacity utilization [2] Trends Defining the Industry's Future - Refining margins are affected by fluctuating crack spreads and global economic uncertainties, particularly in key markets like China, leading to potential cash flow pressures [3] - Steady demand growth for refined products like gasoline, diesel, and jet fuel provides a positive outlook, supported by structural advantages such as access to low-cost energy and high facility complexity [4] - Rising operational costs from store expansions and wage pressures create challenges for financial performance, necessitating careful cost management [5] Current Industry Outlook - The industry currently holds a Zacks Industry Rank of 204, placing it in the bottom 18% of 250 Zacks industries, indicating dull near-term prospects [6][7] - Analysts have revised earnings estimates downward, with a 29.5% decrease for 2024 and a 20.3% decrease for 2025 over the past year [8] Performance Comparison - The industry has underperformed compared to the broader Zacks Oil - Energy Sector and the S&P 500, declining by 11.2% over the past year while the sector increased by 8.2% and the S&P 500 gained 29.2% [10] Current Valuation - The industry is trading at an EV/EBITDA ratio of 3.38X, significantly lower than the S&P 500's 18.81X and slightly below the sector's 3.58X [13] Company Highlights - Marathon Petroleum (MPC): A leading independent refiner with a market capitalization of 12.3 billion, known for a four-quarter average earnings surprise of 51.2%, with shares increasing by 22.1% in a year [23]
3 Stable Refining & Marketing Stocks With Good Potential