Stock Analysis

Marathon Oil Corporation (NYSE:MRO) Is Expected To Breakeven

NYSE:MRO
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Marathon Oil Corporation's (NYSE:MRO): Marathon Oil Corporation operates as an energy company in the United States, Equatorial Guinea, the United Kingdom, and Libya. The US$13.87B market-cap company announced a latest loss of -US$830.00M on 31 December 2017 for its most recent financial year result. Many investors are wondering the rate at which MRO will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for MRO, its year of breakeven and its implied growth rate.

Check out our latest analysis for Marathon Oil

MRO is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$331.24M in 2018. Therefore, MRO is expected to breakeven roughly a couple of months from now! How fast will MRO have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 55.13% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:MRO Past Future Earnings Mar 24th 18
NYSE:MRO Past Future Earnings Mar 24th 18

I’m not going to go through company-specific developments for MRO given that this is a high-level summary, however, take into account that by and large an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before I wrap up, there’s one issue worth mentioning. MRO currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in MRO’s case is 46.93%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of MRO which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at MRO, take a look at MRO’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further research:

  1. Valuation: What is MRO worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether MRO is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Marathon Oil’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Valuation is complex, but we're helping make it simple.

Find out whether Marathon Oil is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.