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.

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 $150.1 million.
  • MRO has traded 8.7 million shares today.
  • MRO traded in a range 200.8% of the normal price range with a price range of $1.03.
  • MRO traded above its daily resistance level (quality: 29 days, meaning that the stock is crossing a resistance level set by the last 29 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. 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 3.2%. MRO has a PE ratio of 6. Currently there are 13 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 6.3 million shares per day over the past 30 days. Marathon Oil has a market cap of $18.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.14 and a short float of 1.8% with 1.91 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Thursday.

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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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.31, 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 0.69, displays a potential problem in covering short-term cash needs.
  • 44.54% is the gross profit margin for MARATHON OIL CORP which we consider to be strong. 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 -18.59% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to $309.00 million or 78.97% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MARATHON OIL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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