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].
(4) share
repurchases.
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 24% 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% 14%
27% 3
Ind Ave 1.6
11
23
NA
Debt/
EPS Down
Net Value Line
Equity
ROE Since 2011
Margin Rating
MRO 24%
10%
1
16% A
Ind Ave 43
13
NA
21 NA
Chart
Note: MRO
stock made good progress off its March 2009 low, surpassing the downtrend off
its June 2007 high (straight red line) and the November 2008 trading high
(green line). Long term, the stock is in
an uptrend (blue lines). Intermediate
term, it is in an uptrend (purple lines).
The wiggly red line is the 50 day moving average. The Dividend Growth Portfolio owns a one half
position in MRO, having Sold Half in mid-2011.
The upper boundary of its Buy Value Range is $30; the lower boundary of
its Sell Half Range is $56.
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