Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Marathon Petroleum Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.2% to 5.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 30, DPO 39, DIO 26). At a 6.7% WACC with mid-year discounting, the terminal value (76% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $378.47 per share, suggesting MPC is undervalued by 52.3% at the current price of $248.48.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 7,721 | 7,708 | 7,695 | 9,145 | 9,615 | 9,855 |
| (−) Net Interest | 1,275 | 1,273 | 1,271 | 1,510 | 1,588 | 1,627 |
| (+) D&A | 2,359 | 2,520 | 2,490 | 2,565 | 2,597 | 2,662 |
| EBITDA | 11,355 | 11,502 | 11,456 | 13,220 | 13,800 | 14,145 |
| (−) Tax | 1,275 | 1,273 | 1,271 | 1,511 | 1,588 | — |
| (−) CapEx | 2,273 | 2,269 | 2,265 | 2,692 | 2,831 | — |
| (−) ΔWC | -680 | -11 | -12 | 1,275 | 413 | — |
| Free Cash Flow (FCF) | 8,486 | 7,970 | 7,931 | 7,742 | 8,968 | — |
| Peers' EBITDA Multiple | 10.9x | |||||
| Terminal Value | 153,893 | |||||
| WACC / Discount Rate | 6.73% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 8,214 | 7,228 | 6,739 | 6,163 | 6,688 | 111,093 |
| Enterprise Value | 146,124 | |||||
| Projection Period | 35,032 | 24.0% | ||||
| Terminal Value | 111,093 | 76.0% | ||||
| (−) Current Net Debt | 30,686 | |||||
| Equity Value | 115,438 | |||||
| (÷) Outstanding Shares | 305M | |||||
| Fair Price | $378 | +52.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.9x | 8.9x | 10.9x | 12.9x | 14.9x |
|---|---|---|---|---|---|
| 4.7% | $273 | $346 | $420 | $494 | $567 |
| 5.7% | $258 | $328 | $399 | $469 | $539 |
| 6.7% | $245 | $312 | $378 | $445 | $512 |
| 7.7% | $232 | $295 | $359 | $423 | $487 |
| 8.7% | $219 | $280 | $341 | $402 | $463 |
Current price: $248.48. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.