Marathon Oil (MRO) has a couple of benefits over its competitors. For one thing, it has the lowest production expenses in the industry. For another thing, it has an excellent balance between its US and international exploration and production.
Financial stats
I would not recommend buying Marathon Oil. There are a number of reasons for this. You might be tempted to buy, as the company’s stock price is currently around $24 whereas the 52 week high is $54. This might seem like a perfect time to buy. It’s not. For one thing, the price to sales ratio is 1.26. This is significantly higher than its major competitors, Chevron (CVX) and Exxon Mobil (XOM). These companies have ratios of .86 and .87 respectively. Despite these strong numbers, the firm only had a net income of $417 million, or $.67 per share for the first quarter of 2011. This is significantly lower than the $996 million it made in 2011, and also the $.88 per share analysts were predicting for this quarter.
Of course, much of this loss was expected. The main factor was the recent spin-off between Marathon Oil and Marathon Petroleum (MPC). Marathon Petroleum is devoted to oil refining, allowing Marathon Oil to focus on exploration and production. Therefore, it took a significant part of the parent company’s profits. However, the main reason for the lower than anticipated profit margins were the high international tax rates, according to Fadel Gheit of Oppenheimer. The company actually had an income tax rate of 66% of the quarter.To continue reading, click here.