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Analyzing Marathon Oil Stock after 2Q17 Earnings

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Aug. 8 2017, Updated 7:10 a.m. ET

Marathon Oil’s 2Q17 earnings

Marathon Oil (MRO) announced its 2Q17 earnings on August 2, 2017, after the market closed. It reported revenues of ~$1.06 billion, which was higher than Wall Street analysts’ consensus of ~$1.02 billion. However, it missed the EPS (earnings per share) estimate of $0.02 for 2Q17. It reported an adjusted loss of $0.17 per share, whereas the Wall Street analyst consensus was for a loss of $0.15 per share.

MRO’s 2Q17 EPS was $0.06 higher than the 2Q16 loss of $0.23 per share. However, when compared sequentially with 1Q17, its 2Q17 EPS was $0.10 lower.

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Price action

Since Marathon Oil’s 2Q17 earnings release, MRO stock price has risen from $12.04 to $12.90. In the three weeks leading up to its earnings, Marathon Oil stock has risen from $11.45 to $12.04 per share, mainly due to the rise in crude oil (USO) prices during the same period.

Same quarter a year ago: 2Q16 post-earnings price action

Last year, Marathon Oil announced its 2Q16 earnings on August 3, 2016, after the market closed. Excluding the one-time items, MRO beat the EPS estimates by $0.01. Following the release, better-than-expected earnings saw MRO stock rise ~26.0% in 12 sessions.

Peers

Year-to-date, Marathon Oil has fallen ~25.0%. The Energy Select Sector SPDR ETF (XLE) is grossly underperforming the S&P 500 ETF (SPY) in 2017. SPY has risen ~12.0%, and XLE has fallen ~12.0%. MRO’s peers Devon Energy (DVN) and Cobalt International Energy (CIE) have fallen ~26.0% and ~88.0%, respectively, in 2017. Just like Marathon Oil, Devon has operations in Oklahoma.

XLE generally invests at least 95.0% of its total assets in oil and gas companies. The SPDR S&P 500 ETF Trust prospectus states, “The Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index.”

In the next part, we’ll take a look at MRO’s recent Wall Street ratings.

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