Story updated at 9:45 a.m. to reflect market activity.
Marathon Oil gained 0.2% to $39.00 in morning trading.
The firm maintained its "overweight" rating for the oil company. The increase reflects the sale of Marathon's Norway business according to analyst Thomas R. Driscoll.
"The recently announced $2.7 billion planned sale of the Norway business highlights MRO's sharp discount and should boost future growth rates," Driscoll wrote. "The shares trade at a pro forma multiple of 5.3x 2015E PICF - a 25% discount to the peer average of 7.1x. The sale will likely add several percentage points to MRO's long-term growth prospects. We forecast long-term production growth rates of 8-10%, in line with MRO's guidance."
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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 a number of strengths, 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 increase in stock price during the past year, compelling growth in net income, attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
- 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.
- You can view the full analysis from the report here: MRO Ratings Report