Is Marathon Oil (MRO) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Marathon Oil (MRO). MRO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 11.60, which compares to its industry's average of 14.81. Over the past 52 weeks, MRO's Forward P/E has been as high as 305.81 and as low as -280.59, with a median of -5.01.
Investors will also notice that MRO has a PEG ratio of 0.30. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MRO's industry currently sports an average PEG of 0.78. MRO's PEG has been as high as 0.59 and as low as -1.69, with a median of -0.99, all within the past year.
Another valuation metric that we should highlight is MRO's P/B ratio of 0.83. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.46. Within the past 52 weeks, MRO's P/B has been as high as 1.05 and as low as 0.28, with a median of 0.62.
Finally, we should also recognize that MRO has a P/CF ratio of 10.37. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 25.20. MRO's P/CF has been as high as 13 and as low as 1.79, with a median of 7.53, all within the past year.
These are just a handful of the figures considered in Marathon Oil's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MRO is an impressive value stock right now.
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