Zacks Industry Outlook Marathon Petroleum, Valero Energy and Galp Energia

Industry Overview - The Zacks Oil and Gas - Refining & Marketing industry includes companies that sell refined petroleum products and non-energy materials, as well as operate terminals and transportation services [4] - The primary activity involves processing crude and other feedstocks into various refined products, with refining margins being highly volatile and influenced by multiple factors [5] Current Industry Trends - Refining margins are affected by fluctuating crack spreads and global economic uncertainties, particularly in key markets like China, leading to short-term operational pressures [6] - There is steady demand growth for refined products such as gasoline, diesel, and jet fuel, which provides a positive outlook despite rising operational costs and economic challenges [7][8] Industry Performance - The Zacks Oil and Gas - Refining & Marketing 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% [13] - The industry's Zacks Industry Rank is 204, placing it in the bottom 18% of 250 Zacks industries, indicating a bearish outlook [9][10] Earnings Outlook - The industry's earnings estimates have decreased significantly, with a 29.5% drop for 2024 and a 20.3% decline for 2025 over the past year, reflecting a negative sentiment among analysts [11] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 3.38X, which is lower than the S&P 500's 18.81X and slightly below the sector's 3.58X [15] - Historical trading ranges for the industry show a high of 6.72X and a low of 1.74X over the past five years, with a median of 3.56X [16] Company Highlights - Marathon Petroleum: A leading independent refiner with a market capitalization of $48.6 billion, benefiting from access to lower-cost crude and strong cash flow generation [17][18] - **Valero Energy**: The largest independent refiner in the U.S. with a refining capacity of 3.2 million barrels per day, showing an expected EPS growth rate of 6$12.3 billion, known for its strong earnings surprise history [21]