NEW YORK (
-- Marathon Oil
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 35.5%. Since the same quarter one year prior, revenues rose by 27.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MRO has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $1,080.00 million or 25.43% when compared to the same quarter last year. Despite an increase in cash flow, MARATHON OIL CORP's average is still marginally south of the industry average growth rate of 32.28%.
- MARATHON OIL CORP's earnings per share declined by 13.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARATHON OIL CORP increased its bottom line by earning $3.05 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($3.54 versus $3.05).
Marathon Oil Corporation, through its subsidiaries, operates as an international energy company with operations in the United States, Canada, Africa, the Middle East, and Europe. It operates through three segments: Exploration and Production, Oil Sands Mining, and Integrated Gas. The company has a P/E ratio of 7.8, above the average energy industry P/E ratio of 5.7 and below the S&P 500 P/E ratio of 17.7. Marathon Oil has a market cap of $17.35 billion and is part of the
industry. Shares are up 5.2% year to date as of the close of trading on Tuesday.
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