TheStreet's Jim Cramer says why he believes Marathon Oil's stock is worth more than $7 per share.
The Houston-based energy company said it would use the proceeds to strengthen its balance sheet and for general corporate purpose, such as funding a portion of its capital program for 2016.
Shares of Marathon Oil are slipping 4.57% to $7.84 on heavy trading volume late Tuesday morning.
Marathon Oil is the latest energy company this year to issue equity in an effort to strengthen its balance sheet, TheStreet's Carleton English wrote in a Real Money article today.
The company also "didn't shy away from the possibility that it may need to issue more shares this year," English noted.
"Although our business plan assumes the successful execution of our non-core assets program to really contribute to our goal of free cash flow neutrality, we have to continue to keep all options on the table and available to us that give us that financial flexibility going forward," CEO Lee Tillman said in a call with analysts.
Real Money contributor Jim Collins said the company's choice of equity over debt is a "wise choice" in a post this morning.
Marathon Oil is continuing to search for the bottom, according to Real Money's chartist Bruce Kamich. Its on balance volume line may be bottoming, but it is too soon to make strong statements about its direction, he added.
About 144.83 million of the company's shares were traded by this morning, well above its average volume of 31.22 million shares per day.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.
This is driven by a few notable weaknesses, which should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks covered.
The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: MROMRO data by YCharts