Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500's (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.
Marathon’s Difficult Decade: One underperformer of the last decade was U.S. oil exploration & production company Marathon Oil Corporation (NYSE: MRO).
Marathon’s past 10 years were dominated by a major restructuring, a surge in U.S. shale oil production and an unprecedented collapse in oil prices due to COVID-19.
Marathon shares started the 2010s trading at around $19.25 but hit their decade-high above $37.99 in mid-2014 just prior to the first collapse in oil prices. That first downturn was driven by a supply glut credited in large part to a booming U.S. shale oil industry.
In 2011, during the shale oil boom, Marathon restructured its company, spinning off its refining business into its own entity. The E&P business continued trading as Marathon under the ticker "MRO," and the refining company began trading as Marathon Petroleum Corp (NYSE: MPC).
The spinoff was structured so that Marathon Oil shareholders received one share of MPC stock for every two shares of MRO they held.
2020 And Beyond: Marathon Oil shares have drifted steadily lower over the past six years since the oil market peaked in 2014. Marathon shares are down 71.7% overall in the past five years, dipping to all-time lows of $3.02 earlier this year when oil prices plunged briefly into negative territory. Yet Marathon Petroleum has held up relatively well, preserving value for investors.
At Marathon’s $19.25 opening price for the decade, an investor would have been able to buy about 52 shares of Marathon stock for $1,000. Those shares would have entitled investors to 26 shares of MPC stock following the spin-off.
Therefore, $1,000 worth of Marathon Oil stock in 2010 would now be worth about $492, assuming reinvested dividends.
The 26 shares of MPC initially worth about $546 have generated a total return of about 142.3% since the spin-off and would now be worth about $1,322. So overall, $1,000 worth of Marathon Oil stock in 2010 would be worth around $1,814 today, assuming reinvested dividends.
Looking ahead, analysts expect even more difficulties for Marathon in 2020. The average price target among the 26 analysts covering the stock is $6, suggesting 22.5% downside.
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