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How Has Marathon Oil’s Stock Reacted to Past Earnings Beats?

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Aug. 8 2016, Updated 10:05 a.m. ET

Marathon Oil’s stock price action following 2Q16 results

Marathon Oil (MRO) announced its 2Q16 results on August 3, 2016, after the market closed. On the day of the earnings release, Marathon Oil’s stock price increased by 4.0% to close at $13.42.

In after-hours price action, Marathon Oil’s stock price traded as high as $13.60 before trading closed. In the three months leading up to the earnings release, Marathon Oil’s stock price increased by ~5%, despite a ~7% decrease in crude oil (USO) (UWTI) (DWTI) prices during the same period.

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Marathon Oil’s stock price trend change

After losing ~84% of its market capitalization between September 2014 and February 2016, Marathon Oil’s (MRO) stock price is finally showing signs of a new uptrend. In April 2016, Marathon Oil’s stock crossed its 200-day moving average for the first time in two years and is currently trading ~4% above it. Since February 2016, Marathon Oil’s stock price has risen by a whopping ~108%.

MRO’s 2016 relative performance

In 2016, MRO has been underperforming bigger upstream companies from the S&P 500 (SPY). Whereas MRO has risen by ~8% in 2016, bigger oil and gas producers Devon Energy (DVN), Occidental Petroleum (OXY), and EOG Resources (EOG) have risen by ~20%, ~12%, and ~17%, respectively.

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MRO’s stock price behavior after past earnings beats

In the last six quarters, there were four occasions—1Q16, 3Q15, 2Q15, and 1Q15—when Marathon Oil beat the earnings expectations. Marathon Oil reported its 1Q16 earnings after the market closed on May 4, 2016. In 1Q16, excluding one-time items, Marathon Oil reported EPS of -$0.43, $0.02 better than the EPS estimate of -$0.45. Following the earnings release, in a contrarian reaction, the better-than-expected earnings led to Marathon Oil’s stock price falling by ~7% in three sessions.

MRO’s 3Q15 post-earnings release reaction was negative, with the stock price falling by ~11% in six sessions after beating the EPS estimate by $0.21. A similar contrarian reaction was observed after the 2Q15 and 1Q15 results, when Marathon Oil’s stock price fell by ~28% in three weeks and ~8% in two weeks, respectively, after beating the consensus EPS estimates by $0.01 and $0.09.

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