- If you are wondering whether MPLX at around US$58.96 is still offering value or starting to look fully priced, you are in the right place.
- The unit price has delivered returns of 1.2% over the last 7 days, 0.1% over 30 days, 9.4% year to date, 18.8% over 1 year and very large gains over 3 and 5 years, which naturally raises questions about what is already reflected in the current valuation.
- Recent news coverage has focused on MPLX's position within the US energy infrastructure space and how income focused investors view its cash generation and distributions. This context helps explain why the market keeps reassessing both the potential and the risks attached to the units.
- MPLX currently holds a value score of 5 out of 6. This suggests that it screens as undervalued on most of the checks used in this framework. Next up is a walk through the key valuation approaches used here, along with a look at a more complete way to think about value at the end of the article.
Find out why MPLX's 18.8% return over the last year is lagging behind its peers.
Approach 1: MPLX Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting the cash it might generate in the future and then discounting those cash flows back to today.
For MPLX, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow sits at about $4.57b. Analyst estimates combined with extrapolations suggest projected free cash flow of $5.58b by 2030, with intermediate years such as 2026 and 2027 modeled at $3.56b and $4.28b respectively, all in dollar terms and then discounted back to today.
Bringing all those discounted cash flows together produces an estimated intrinsic value of about $135.15 per unit. Compared with the current unit price around $58.96, the DCF output points to an implied discount of about 56.4%, which indicates MPLX screens as materially undervalued on this measure.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests MPLX is undervalued by 56.4%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.
Approach 2: MPLX Price vs Earnings
For a profitable business like MPLX, the P/E ratio is a useful yardstick because it directly links what you pay for each unit to the earnings that support that price. Investors typically accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when growth expectations are modest or risks are higher.
MPLX currently trades on a P/E of 12.19x. That sits below the Oil and Gas industry average P/E of 16.43x and also below the peer group average of 21.22x. On the surface, this points to a lower earnings multiple than many industry peers.
Simply Wall St’s Fair Ratio for MPLX is 23.86x. This is a proprietary estimate of what the P/E might be given factors such as earnings growth, profit margins, industry, market cap and specific risks. This makes it more tailored than a simple comparison with broad industry or peer averages. With the Fair Ratio well above the current 12.19x P/E, the units screen as undervalued on this P/E based view.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your MPLX Narrative
Earlier it was mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you pick or create a story for MPLX that links its business outlook to a financial forecast and fair value. You can then compare that fair value with today’s price and see how different views can coexist. For example, one investor might lean toward the bullish US$73.00 analyst target, while another aligns with the more cautious US$54.00 target. The whole picture updates automatically as new earnings, news and assumptions are added.
Do you think there's more to the story for MPLX? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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