Marathon Oil explores for, produces and markets crude oil and condensate, NGLs and natural gas. The company was founded in 1887 and is based in Houston, Texas.
MRO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Marathon Oil Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Marathon Oil Corp ranked in the 0th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. In terms of the factors that were most noteworthy in this DCF analysis for MRO, they are:
The compound growth rate in the free cash flow of Marathon Oil Corp over the past 3.51 years is -0.49%; that's higher than just 3.51% of free cash flow generating stocks in the Energy sector.
50% of the company's capital comes from equity, which is greater than only 20.19% of stocks in our cash flow based forecasting set.
Marathon Oil Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -3.3. This coverage rate is greater than that of only 14.99% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CLR, CPE, DVN, GLOG, and NINE can be thought of as valuation peers to MRO, in the sense that they are in the Energy sector and have a similar price forecast based on DCF valuation.
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With an oil price forecast of $51 per barrel for 2021 and of $56 per barrel for 2022, Marathon Oil Corporation (NYSE: MRO ) is likely to generate around $2.1 billion over the next couple of years, which is enough to take its leverage to less than 1.0x by yearend 2022, according to Mizuho Securities. The Marathon Oil Analyst: Vincent Lovaglio upgraded Marathon Oil from Neutral to Buy, while raising the price target from $6 to $11. The Marathon Oil Thesis: The company has announced plans … Full story available on Benzinga.com