Marathon Oil (MRO) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Marathon Oil ( MRO) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Marathon Oil as such a stock due to the following factors:

  • MRO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $189.0 million.
  • MRO has traded 352,348 shares today.
  • MRO traded in a range 233.7% of the normal price range with a price range of $1.32.
  • MRO traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on MRO:

Marathon Oil Corporation operates as an energy company worldwide. The stock currently has a dividend yield of 2.4%. MRO has a PE ratio of 13.5. Currently there are 11 analysts that rate Marathon Oil a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Marathon Oil has been 5.2 million shares per day over the past 30 days. Marathon Oil has a market cap of $22.5 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.69 and a short float of 1% with 1.25 days to cover. Shares are down 9.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Marathon Oil as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 26.4% when compared to the same quarter one year prior, rising from $450.00 million to $569.00 million.
  • Net operating cash flow has significantly increased by 53.73% to $1,645.00 million when compared to the same quarter last year. In addition, MARATHON OIL CORP has also vastly surpassed the industry average cash flow growth rate of -44.35%.
  • MARATHON OIL CORP has improved earnings per share by 27.0% 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 reported lower earnings of $2.23 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $2.23).
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 61.55%. Regardless of MRO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRO's net profit margin of 15.02% compares favorably to the industry average.

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