Marathon Oil (MRO) Stock Down on Slipping Oil Prices

Marathon Oil (MRO) stock is declining in midday trading on Thursday, as oil prices decline on greater-than-expected U.S. crude oil inventories.
By Amanda Albright ,

NEW YORK (TheStreet) -- MarathonOil  (MRO) - Get Report stock is falling by 1.33% to $17.08 in midday trading on Thursday, as oil prices continue to decline and affect stocks in the sector.

Oil prices are down after U.S. crude oil inventories increased at a higher rate than analysts had expected.

U.S. crude inventories rose by 4.2 million barrels last week, according to a report today by the Energy Information Administration. Analysts surveyed by the Wall Street Journal projected an increase of 1.1 million barrels.

Crude oil (WTI) is falling by 2.49% to $41.86 per barrel this afternoon and Brent crude is slipping by 2.77% to $44.54 per barrel, according to the CNBC.com index.

"Demand's decent, it's just that supply is not giving it up," Kyle Cooper, analyst at IAF Advisors, told the Journal

Based in Houston, Marathon Oil explores for and produces crude oil and natural gas. 

Separately, TheStreet Ratings team rates MARATHON OIL CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate MARATHON OIL CORP (MRO) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 273.8% when compared to the same quarter one year ago, falling from $431.00 million to -$749.00 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 346.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • MARATHON OIL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MARATHON OIL CORP increased its bottom line by earning $1.41 versus $1.32 in the prior year. For the next year, the market is expecting a contraction of 197.2% in earnings (-$1.37 versus $1.41).
  • Along with the very weak revenue results, MRO underperformed when compared to the industry average of 37.2%. Since the same quarter one year prior, revenues plummeted by 51.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 54.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -54.11% is in-line with the industry average.
  • You can view the full analysis from the report here: MRO

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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