Earnings Estimates Moving Higher for Marathon Oil (MRO): Time to Buy?
Marathon Oil (MRO) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this energy company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Marathon Oil, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $0.13 per share for the current quarter, which represents a year-over-year change of +121.67%.
Over the last 30 days, the Zacks Consensus Estimate for Marathon Oil has increased 5.65% because two estimates have moved higher while two have gone lower.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $0.61 per share, representing a year-over-year change of +152.59%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for Marathon Oil versus no negative revisions. This has pushed the consensus estimate 19.48% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Marathon Oil currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for Marathon Oil have attracted decent investments and pushed the stock 16% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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