Marathon Oil(MRO-NYSE) Northland Initiates with Market Perform on High Leverage

STA Research
by: STA Research

Northland Securities’s analyst Subash Chandra, today  initiated the firm’s coverage of Marathon Oil with a rating of Market Perform and a $5.40 target on the stock.  The analyst is concerned about the company’s Bakken asset and the companies high leverage basis. Chandra does mention that Marathon’s cash costs are the lowest they have ever been in the second quarter, which he sees as a positive factor and possible trend.

STA Research(stocktargetadvisor) has a average target of $6.23 on the stock, and a consensus Hold rating. STA’s  view of the stock is Slightly Bearish with a score of 4.4 out of 10, where 0 is very bearish and 10 very bullish.
What to like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Underpriced compared to book value
The stock is trading low compared to its peers on a price to book value basis and is in the top quartile. It may be underpriced but do check its financial performance to
make sure there is no specific reason.
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
Positive free cash flow
The company had positive total free cash flow in the most recent four quarters.
What to not like:
Overpriced compared to earnings
The stock is trading high compared to its peers on a price to earning basis and is above the sector median.
Poor capital utilization
The company management has delivered below median return on invested capital in the most recent 4 quarters compared to its peers.
Low Earnings Growth
This stock has shown below median earnings growth in the previous 5 years compared to its sector
Low Revenue Growth
This stock has shown below median revenue growth in the previous 5 years compared to its sector
Low Dividend Growth
This stock has shown below median dividend growth in the previous 5 years compared to its sector.

 

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