Will This Ratings Downgrade Hurt Marathon Oil (MRO) Stock Today?

NEW YORK (TheStreet) -- Marathon Oil Corp. (MRO) was downgraded to "market perform" from "outperform" at Wells Fargo (WFC) on Friday, based on a valuation call.

The firm set a price target of $38-$41, down from $38-$42 on the international energy company.

Shares of Marathon Oil are lower by -0.13% to $39.10 in pre-market trading this morning.

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

"We rate MARATHON OIL CORP (MRO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 200.0% when compared to the same quarter one year prior, rising from $383.00 million to $1,149.00 million.
  • The gross profit margin for MARATHON OIL CORP is rather high; currently it is at 61.01%. 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 34.09% significantly outperformed against the industry.
  • The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.97 is somewhat weak and could be cause for future problems.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: MRO Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more

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