With A -36.5% Earnings Drop Lately, Did Marathon Oil Corporation (NYSE:MRO) Underperform Its Industry?
Understanding Marathon Oil Corporation’s (NYSE:MRO) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Marathon Oil is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for Marathon Oil
Was MRO weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to analyze different stocks on a similar basis, using the latest information. For Marathon Oil, its latest twelve-month earnings is -$2,238.0M, which, against last year’s level, has become more negative. Since these figures are relatively short-term, I have created an annualized five-year figure for MRO’s earnings, which stands at $220.2M.
We can further evaluate Marathon Oil’s loss by researching what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -17.86%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 17.75% in the past twelve months, . This is a turnaround from a volatile drop of -7.15% in the last couple of years. This means whatever tailwind the industry is profiting from, Marathon Oil has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to examine company-specific issues Marathon Oil may be facing and whether management guidance has dependably been met in the past. You should continue to research Marathon Oil to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for MRO’s future growth? Take a look at our free research report of analyst consensus for MRO’s outlook.
2. Financial Health: Is MRO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
