Marathon Oil (MRO) 2013 Review

Marathon Oil is an oil and natural gas production company, having recently spun off its refining operations.  As a recently separated entity, it has limited historical data. However, future profit and dividend increases are expected in the 8-13% range and ROE is estimated in the 10-12% area.  Looking ahead both earnings and dividends will be driven by:

(1) expanding activity in Texas’ Eagle Ford shale,

(2) divesting of underperforming assets,

(3) strong inventory of development projects [Indonesia, Iraq, Poland].

Negatives:

(1) potential fluctuations in oil and gas prices,

(2) political risks associated with doing business in foreign countries,

(3) operational problems in Libya.

MRO is rated A by Value Line, has a 26% debt to equity ratio and its stock yields 2.1%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2011

MRO         2.1%           8%              28%             3

Ind Ave      1.3             11                15               NA 

                  Debt/                        EPS Down       Net        Value Line

                  Equity         ROE      Since 2011      Margin       Rating

MRO         26%            10%            1                 11%           A

Ind Ave      51               10             NA                19            NA

     Chart

            Note: MRO made good progress off its March 2009 low, surpassing the downtrend off its June 2007 high (red line) and the November 2008 trading high (green line).  All trends (long, medium and short term) are up (straight blue, purple and brown lines respectively).  The wiggly blue line is on balance volume.  The Dividend Growth Portfolio owns a 50% position in MRO by virtue of having Sold the spun off shares of Marathon Refining.  The upper boundary of its Buy Value Range is $25; lower boundary of its Sell Half Range is $43.

 

http://finance.yahoo.com/q?s=MRO

9/13