Water-Logged And Getting Wetter: Marathon Oil (MRO)

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.

Trade-Ideas LLC identified Marathon Oil ( MRO) as a "water-logged and getting wetter" (weak stocks crossing below support 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 $194.8 million.
  • MRO has traded 3.3 million shares today.
  • MRO traded in a range 240.9% of the normal price range with a price range of $1.76.
  • MRO traded below its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on MRO:

Marathon Oil Corporation operates as an energy company. It operates in three segments: North America Exploration and Production, International Exploration and Production, and Oil Sands Mining. The stock currently has a dividend yield of 2.8%. MRO has a PE ratio of 21.1. Currently there are 12 analysts that rate Marathon Oil a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Marathon Oil has been 6.8 million shares per day over the past 30 days. Marathon Oil has a market cap of $20.2 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.32 and a short float of 1.6% with 1.72 days to cover. Shares are up 5.9% 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 hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 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 146.9% when compared to the same quarter one year prior, rising from $375.00 million to $926.00 million.
  • 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has declined marginally to $1,155.00 million or 6.02% when compared to the same quarter last year. Despite a decrease in cash flow MARATHON OIL CORP is still fairing well by exceeding its industry average cash flow growth rate of -42.26%.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARATHON OIL CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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