Analyzing MRO, a Low Dividend Grower
What led to MRO’s revenue fall in 2015 and 2016?
Marathon Oil’s (MRO) revenues and other income fell 48.0% and 21.0% in 2015 and 2016, respectively. This decline resulted from a fall in revenues for crude oil and condensates, natural gas liquids, natural gas, and synthetic crude oil.
Synthetic crude oil saw some recovery in 2016. The US segment, followed by Canada, Libya, and other international regions, also recorded decreases. Income from equity investments fell in 2015 and 2016.
MRO recorded a gain on disposal of assets in both years, in contrast to 2014. Other income also fell during this period. The rate of fall in revenues slowed in 2016 as the industry started to recover.
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What led to MRO’s negative EPS in 2015 and 2016?
Marathon Oil’s (MRO) costs and expenses fell 11.0% and 35.0% in 2015 and 2016, respectively. Its impairment and exploration costs rose in 2015 before decreasing in 2015. As a result, income from operations fell 268.0% and 67.0% in 2015 and 2016, respectively.
MRO recorded negative income from operations in both years. Its interest expense increased 12.0% and 25.0% in 2015 and 2016, respectively. This trend translated into a 173.0% and 20.0% fall in EPS (earnings per share) for 2015 and 2016, respectively. The company recorded negative EPS in both years. The rate of the decrease in its EPS fell in 2016.
The Schwab US Dividend Equity ETF (SCHD) is a dividend ETF with 6.0% exposure to energy. SCHD has a PE ratio of 20.3x and a dividend yield of 3.0%.
The iShares International Select Dividend ETF (IDV) is a dividend ETF with 10.0% exposure to energy. It has a PE ratio of 13.5x and a dividend yield of 3.9%.