Marathon Oil vs. APA: Which Energy Stock is a Better Choice?

NYSE: MRO | Marathon Oil Corporation News, Ratings, and Charts

MRO – Amid rising demand for oil, OPEC+ has agreed to phase out its production cuts. Given this backdrop, popular oil & gas companies Marathon Oil (MRO) and Apache (APA) should witness substantial growth. But which of these stocks is a better buy now? Read more to find out.

Marathon Oil Corporation (MRO) in Houston, Tex., is an independent exploration and production company in the United States and Equatorial Guinea. The company explores for, produces, and markets crude oil and condensate, natural gas liquids, and natural gas and its products. In comparison, Apache Corporation (APA), which is also headquartered in Houston, explores for and produces oil and gas. The company operates through its subsidiaries: Apache Corporation and APA Corporation Suriname.

As the countries phase out pandemic-driven restrictions, demand for crude oil is rising quickly, causing oil prices to climb to multi-year highs. OPEC+ countries recently agreed to increase oil production and supply by 2 million bpd or 0.4 million bpd per month from August through December 2021. The cartel aims to phase out production cuts entirely by around September 2022. Thus, MRO and APA should benefit from the industry tailwinds.

MRO has gained 33% over the past six months, while APA has returned 4% over the period. Also, MRO’s 77.2% gains year-to-date compare with APA’s 26.2% returns. MRO is the clear winner with 105.9% gains versus APA’s 15.3% in terms of past year’s performance.

But which stock is a better buy now? Let’s find out.

Latest Developments

On May 4, APA agreed with Egypt’s Ministry of Petroleum and Mineral Resources and the Egyptian General Petroleum Corporation to modernize its petroleum sector. This should facilitate higher investments by Apache Egypt, resulting in more production, while also delivering cost efficiencies by introducing new technology.

On July 28, MRO declared a $0.5% dividend, payable on September 10, 2021.

Recent Financial Results

MRO’s revenues increased 320.2% year-over-year to $1.14 billion in its  fiscal second quarter, ended June 30. Its operating income grew 114.9% from its year-ago value to $105 million, while its net income improved 102.1% year-over-year to $16 million. The company’s EPS improved 102.1% year-over-year to $0.02.

APA’s total revenues increased 133.5% year-over-year to $1.76 billion in its  fiscal second quarter, ended June 30. Its net income attributable to common stock improved 181.9% year-over-year to $316 million. The company’s EPS increased 180.4% year-over-year to $0.82.

Past and Expected Financial Performance

MRO’s revenue has grown at a 0.8% CAGR over the past five years. Analysts expect MRO’s revenue to increase 54.5% in the current quarter and 45.4% in the current year. The company’s EPS is expected to grow 185.7% in the current quarter and 164.7% in the current year.

In comparison,  APA’s revenues have grown  at a 3.6% CAGR over the past five years. Analysts expect the company’s revenue to increase 64.6% in the current year. The company’s EPS is expected to grow 506.2% in the current quarter and 355.6% in the current year.


APA is more profitable, with a levered FCF margin and EBITDA margin of 49.78% and 53.36%, respectively, compared to MRO’s 35.46% and 49.41%.

Furthermore, APA’s 215.11% ROE compares with MRO’s negative 4.97%. And APA’s net 11.78% income margin is higher than MRO’s negative 13.44%.

Thus, APA is more profitable.


In terms of forward P/E GAAP, MRO is currently trading at 15.28x, which is 65.1% higher than APA, which is currently trading at 5.33x. Also, MRO’s 4.13 forward EV/EBITDA ratio is 8.5% higher than APA’s 3.78.

Thus, APA is the affordable stock here.

POWR Ratings

APA has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. MRO, in contrast,  has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

APA has a grade of B for Value, while MRO has a grade of C for Value. APA’s forward non-GAAP P/E ratio of 5.59 is 44.8% lower than the industry average of 10.13, in sync with its grade. In contrast, MRO’s forward non-GAAP P/E multiple of 11.23 is 10.8% higher than the industry average, consistent with its grade.

APA has an A grade for Quality, owing to its higher-than-industry average profit margins. APA’s 49.78% levered free cash flow margin is 311.6% higher than the 12.09% industry average. MRO, on the other hand, has a B grade for Quality. This is justified because MRO’s 35.46% levered FCF margin is 193.2% higher than the industry average.

Of the 92 stocks in the Energy – Oil & Gas industry, APA is ranked #3 while MRO is ranked #24.

Beyond what we’ve stated above, we have also rated both the stocks for Stability, Momentum, Sentiment, and Growth. Click here to view APA ratings. Also, get all MRO ratings here.

The Winner

The oil-producing companies benefited significantly in the first half of 2021, with production cuts amid  rising demand. Furthermore,  the companies are expected to continue  benefiting from  growing demand, given OPEC’s plan to phase out the production cuts gradually. While both APA and MRO should benefit from this backdrop, its higher profit margins and growth prospects make APA the better buy here.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Energy – Oil & Gas industry here.

MRO shares rose $0.01 (+0.08%) in after-hours trading Tuesday. Year-to-date, MRO has gained 86.39%, versus a 19.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MROGet RatingGet RatingGet Rating
APAGet RatingGet RatingGet Rating

Most Popular Stories on

Inflation Not Fading Fast Enough for Stock Investors

Investors may have celebrated the end of high inflation too soon. The CPI report shows inflation bouncing higher and thus pushing back the start date for Fed rate cuts. This has the S&P 500 (SPY) coming off recent highs. This begs questions like how much more downside could we see? And when will the bull market get back on track? 44 year investment veteran Steve Reitmeister shares his answers to these questions in this timely commentary including a preview of his top picks to stay ahead of the pack. Read on below for more...

3 Auto Stocks to Consider Over TSLA in April

Tesla (TSLA) reported a decline in deliveries in the first quarter, and Wall Street expects the company to deliver fewer vehicles than last year. Furthermore, rising competition, slowing EV sales, and stretched valuation make TSLA unattractive from an investment standpoint. Considering these factors, investors could consider buying fundamentally strong auto stocks Blue Bird (BLBD), Rolls-Royce Holdings (RYCEY), and Stellantis (STLA) over Tesla (TSLA). Read more...

3 Top-Rated Tech Stock Buys for Value in April

The technology sector is undergoing a notable surge, propelled by increasing digitalization endeavors among businesses and governmental support for technological progress. So, fundamentally sound tech stocks Box Inc. (BOX), Teradata (TDC), and Materialise (MTLS), which seem pretty undervalued, might be ideal buys this month. Continue reading...

Top Software Stocks at the Forefront of Market Gains

The software industry's prospects appear bright due to increasing investments in digital transformation, high demand for advanced software services from various sectors, and the integration of emerging technologies such as generative AI. Therefore, investors could consider buying quality software stocks Autodesk (ADSK), DocuSign (DOCU), and Pegasystems (PEGA) for solid gains. Read more...

Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

Read More Stories

More Marathon Oil Corporation (MRO) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MRO News