U.S. markets open in 8 hours 52 minutes
  • S&P Futures

    4,279.00
    -7.50 (-0.17%)
     
  • Dow Futures

    33,937.00
    -44.00 (-0.13%)
     
  • Nasdaq Futures

    13,500.75
    -22.50 (-0.17%)
     
  • Russell 2000 Futures

    1,994.70
    -7.00 (-0.35%)
     
  • Crude Oil

    90.21
    -0.29 (-0.32%)
     
  • Gold

    1,766.10
    -5.10 (-0.29%)
     
  • Silver

    19.27
    -0.19 (-0.97%)
     
  • EUR/USD

    1.0079
    -0.0013 (-0.13%)
     
  • 10-Yr Bond

    2.8800
    0.0000 (0.00%)
     
  • Vix

    19.56
    -0.34 (-1.71%)
     
  • GBP/USD

    1.1898
    -0.0034 (-0.29%)
     
  • USD/JPY

    136.2620
    +0.4000 (+0.29%)
     
  • BTC-USD

    22,829.08
    -579.84 (-2.48%)
     
  • CMC Crypto 200

    542.93
    -14.80 (-2.65%)
     
  • FTSE 100

    7,541.85
    +26.10 (+0.35%)
     
  • Nikkei 225

    28,930.02
    -12.12 (-0.04%)
     

Will Marathon (MRO) Continue to Deliver Earnings Beat in Q1?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Marathon Oil Corporation MRO is set to release first-quarter results on May 4. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 98 cents per share on revenues of $1.8 billion.

Let’s delve into the factors that might have influenced the independent oil and gas producer’s results in the March quarter. But it’s worth taking a look at MRO’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based upstream player handily beat the consensus mark on stronger liquid realizations and better-than-expected domestic production. MRO had reported adjusted earnings per share of 77 cents, well above the Zacks Consensus Estimate of 55 cents. Revenues of $1.8 billion generated by the firm also came in above the Zacks Consensus Estimate by 14.5%.

Marathon beat the Zacks Consensus Estimate for earnings in each of the last four quarters, resulting in an earnings surprise of 37.4%, on average. This is depicted in the graph below:

Marathon Oil Corporation Price and EPS Surprise

Marathon Oil Corporation Price and EPS Surprise
Marathon Oil Corporation Price and EPS Surprise

Marathon Oil Corporation price-eps-surprise | Marathon Oil Corporation Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 4.3% upward in the past seven days. The estimated figure indicates a 366.7% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 68.9% increase from the year-ago period.

Factors to Consider

Marathon is likely to have cashed in on the surge in hydrocarbon realizations. In the previous three-month period, MRO’s key U.S. E&P segment realized average liquids prices (crude oil and condensate) of $77.03 per barrel — significantly above the year-earlier level of $39.71. Additionally, average realized natural gas prices were up 126.8% year over year to $5.24 per thousand cubic feet. The increase in price is most likely to have continued in the to-be-reported quarter, with oil and gas revisiting their multi-year highs following geopolitical tensions and the ongoing macroeconomic recovery. This price boost is likely to have buoyed the first-quarter revenues and cash flows of Marathon.

MRO is also expected to have benefited from higher production during the March period. In the fourth quarter of 2021, the company’s net production from the domestic unit averaged 304,000 barrels of oil equivalent per day (BOE/d), increasing from 280,000 BOE/d a year ago. The uptick is most likely to have continued in the to-be-reported quarter, thanks to MRO’s impressive production profile from its high-margin U.S. resource plays (Eagle Ford, Bakken, Oklahoma and Permian).

On a somewhat bearish note, the increase in Marathon’s costs might have dented the company’s to-be-reported bottom-line numbers. MRO’s production costs in the fourth quarter increased around 14% year over year to $156 million. The upward cost trajectory is likely to have continued in the first quarter due to cost inflation and higher energy prices.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Marathon Oil is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: MRO has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 98 cents per share each.

Zacks Rank: Marathon Oil currently carries a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for MRO, here are some firms from the energy space that you may want to consider on the basis of our model:

EOG Resources, Inc. EOG has an Earnings ESP of +0.89% and a Zacks Rank #1. The firm is scheduled to release earnings on May 5.

You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2022, EOG has a projected earnings growth rate of 88.5%. Valued at around $68.4 billion, EOG has increased around 64.6% in a year.

Rattler Midstream LP RTLR has an Earnings ESP of +1.96% and a Zacks Rank #2. The firm is scheduled to release earnings on May 3.

For 2022, RTLR has a projected earnings growth rate of 34.9%. Valued at around $2 billion, Rattler Midstream has increased around 30.4% in a year.

Calumet Specialty Products Partners, L.P. CLMT has an Earnings ESP of +31.53% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 6.

CLMT is valued at around $1.1 billion. For 2022, the partnership has a projected earnings growth rate of 70.3%. Calumet has gained around 131.5% in a year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Marathon Oil Corporation (MRO) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Calumet Specialty Products Partners, L.P. (CLMT) : Free Stock Analysis Report

Rattler Midstream LP (RTLR) : Free Stock Analysis Report

To read this article on Zacks.com click here.