On July 18, 2023, Marathon Oil Corp (MRO, Financial) saw a 3.51% increase in its stock price, reaching $24.8. This energy company, with a market cap of $15.3 billion and sales of $7.3 billion, is primarily engaged in the exploration and production of unconventional resources in the United States. As of 2022, Marathon Oil reported net proved reserves of 1.3 billion barrels of oil equivalent and a net production average of 343 thousand barrels of oil equivalent per day. With a GF Value of $29.05, the stock appears to be modestly undervalued.
An Overview of Marathon Oil's GF Value
The GF Value of Marathon Oil Corp (MRO, Financial) is calculated considering historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. This GF Value Line represents the fair value at which the stock should ideally be traded. Considering the current price of $24.8 per share, Marathon Oil seems to be modestly undervalued, indicating the potential for higher future returns than its business growth.
Financial Strength of Marathon Oil
Investing in financially strong companies reduces the risk of permanent capital loss. A good starting point to understand a company's financial strength is its cash-to-debt ratio. Marathon Oil's cash-to-debt ratio stands at 0.03, which is lower than 91.38% of companies in the Oil & Gas industry. GuruFocus ranks Marathon Oil's overall financial strength at 5 out of 10, indicating fair financial health.
Profitability of Marathon Oil
Marathon Oil has been profitable 6 out of the past 10 years. Over the past year, the company reported a revenue of $7.3 billion and an EPS of $4.07. Its operating margin of 43.3% ranks better than 82.69% of companies in the Oil & Gas industry. Overall, the profitability of Marathon Oil is ranked 7 out of 10, indicating fair profitability.
Growth of Marathon Oil
Growth is a crucial factor in company valuation. Marathon Oil's 3-year average annual revenue growth is 20.6%, which ranks better than 72.03% of companies in the Oil & Gas industry. Its 3-year average EBITDA growth rate is 30.3%, ranking better than 67.73% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) with its weighted average cost of capital (WACC) provides insights into its profitability. Marathon Oil’s ROIC is 14.29, and its WACC is 10.26, indicating a healthy profitability relative to its cost of capital.
Conclusion
In conclusion, Marathon Oil (MRO, Financial) appears to be modestly undervalued, offering potential for higher future returns. The company's fair financial condition and profitability, combined with its strong growth, make it an attractive investment option. For more information about Marathon Oil stock, check out its 30-Year Financials here.
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