Cramer: This stock should not be trading $82 – CNBC.com

Cramer: This stock should not be trading $82 – CNBC.com

Late January, Marathon Petroleum posted fourth-quarter net income of $2.10 a share and revenue of $24.93 billion. Analysts polled by Thomson Reuters had anticipated earnings of $1.15 a share on $22.78 billion in revenue.

“That’s a magnificent 95-cent beat,” Cramer said. “And the company’s gross margin soared to $15.69 per barrel, up huge from $9.25 per barrel in the previous quarter,” Cramer added.

On the news shares spiked higher but in recent days they’ve slid back to pre-earnings levels.

Cramer thinks part of the decline stems from skepticism about the sector broadly. “Marathon Petroleum is the refiner that was spun-off from Marathon Oil about three years ago,” Cramer reminded.

And right now the Street is bearish on the space largely because the spread between WTI and Brent is growing more narrow. That’s no good for refiners, broadly.

“The sector is all about margins,” Cramer explained. “If they can buy cheaper domestic oil and turn it around at higher prices, pegged to Brent, they do well.” And if the spread comes in, then in theory profits do too.

However, Cramer isn’t sure the narrower spread is a good reason to sell Maraton Petroleum specifically.

Not only does the company appear to be executing well, he believes Marathon Petroleum is also the beneficiary of a fundamental catalyst.

“A lot of WTI had been landlocked, but the nation has recently built out a ton of pipeline capacity down to the Gulf Coast region, ” Cramer explained.

“And, as it happens, Marathon Petroleum has a ton of capacity down in the Gulf.”

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Considering the potential and the strong earnings report, should Marathon Petroleum be trading where it was before it reported?

“Personally, I think that’s crazy,” Cramer said.

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Cramer: This stock should not be trading $82 – CNBC.com

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