Marathon Oil Corp Stock Buy Recommendation Reiterated (MRO)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Marathon Oil (NYSE: MRO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.3%. Since the same quarter one year prior, revenues rose by 13.2%. 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 gross profit margin for MARATHON OIL CORP is rather high; currently it is at 67.30%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.79% trails the industry average.
  • Net operating cash flow has increased to $1,205.00 million or 16.53% when compared to the same quarter last year. Despite an increase in cash flow, MARATHON OIL CORP's cash flow growth rate is still lower than the industry average growth rate of 26.66%.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that MRO's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.

Marathon Oil Corporation operates as an energy company worldwide. Marathon Oil has a market cap of $21.3 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 14.00, below the S&P 500 P/E ratio of 18.00. Shares are down 2.6% year to date as of the close of trading on Friday.

You can view the full Marathon Oil Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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