Intrinsic value of Marathon Oil - MRO

Previous Close

$15.16

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$15.16

 
Intrinsic value

$5.16

 
Up/down potential

-66%

 
Rating

str. sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of MRO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -25.78
  2.70
  2.93
  3.14
  3.32
  3.49
  3.64
  3.78
  3.90
  4.01
  4.11
  4.20
  4.28
  4.35
  4.42
  4.47
  4.53
  4.57
  4.62
  4.65
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.83
  4.85
  4.87
  4.88
  4.89
Revenue, $m
  4,261
  4,376
  4,504
  4,646
  4,800
  4,968
  5,148
  5,343
  5,551
  5,774
  6,011
  6,263
  6,531
  6,816
  7,117
  7,435
  7,771
  8,127
  8,502
  8,898
  9,315
  9,755
  10,218
  10,706
  11,219
  11,760
  12,328
  12,926
  13,555
  14,217
  14,912
Variable operating expenses, $m
 
  6,428
  6,616
  6,823
  7,050
  7,295
  7,561
  7,846
  8,151
  8,478
  8,826
  9,184
  9,577
  9,994
  10,435
  10,902
  11,395
  11,916
  12,467
  13,047
  13,659
  14,303
  14,983
  15,698
  16,451
  17,243
  18,077
  18,954
  19,876
  20,846
  21,866
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  5,161
  6,428
  6,616
  6,823
  7,050
  7,295
  7,561
  7,846
  8,151
  8,478
  8,826
  9,184
  9,577
  9,994
  10,435
  10,902
  11,395
  11,916
  12,467
  13,047
  13,659
  14,303
  14,983
  15,698
  16,451
  17,243
  18,077
  18,954
  19,876
  20,846
  21,866
Operating income, $m
  -900
  -2,052
  -2,112
  -2,178
  -2,250
  -2,328
  -2,412
  -2,503
  -2,600
  -2,704
  -2,814
  -2,921
  -3,046
  -3,178
  -3,318
  -3,467
  -3,624
  -3,790
  -3,965
  -4,149
  -4,344
  -4,549
  -4,765
  -4,992
  -5,232
  -5,483
  -5,749
  -6,028
  -6,321
  -6,629
  -6,954
EBITDA, $m
  1,495
  -2,041
  -2,100
  -2,166
  -2,238
  -2,316
  -2,401
  -2,491
  -2,589
  -2,692
  -2,803
  -2,921
  -3,046
  -3,178
  -3,318
  -3,467
  -3,624
  -3,790
  -3,965
  -4,149
  -4,344
  -4,549
  -4,765
  -4,992
  -5,232
  -5,483
  -5,749
  -6,028
  -6,321
  -6,629
  -6,954
Interest expense (income), $m
  375
  343
  361
  381
  403
  427
  454
  482
  513
  545
  580
  618
  657
  699
  744
  791
  841
  894
  950
  1,009
  1,071
  1,136
  1,206
  1,278
  1,355
  1,435
  1,520
  1,610
  1,704
  1,802
  1,906
Earnings before tax, $m
  -1,235
  -2,395
  -2,473
  -2,559
  -2,653
  -2,755
  -2,866
  -2,985
  -3,113
  -3,249
  -3,395
  -3,538
  -3,703
  -3,877
  -4,062
  -4,258
  -4,465
  -4,684
  -4,914
  -5,158
  -5,415
  -5,685
  -5,970
  -6,270
  -6,586
  -6,919
  -7,269
  -7,637
  -8,024
  -8,432
  -8,860
Tax expense, $m
  905
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -2,140
  -2,395
  -2,473
  -2,559
  -2,653
  -2,755
  -2,866
  -2,985
  -3,113
  -3,249
  -3,395
  -3,538
  -3,703
  -3,877
  -4,062
  -4,258
  -4,465
  -4,684
  -4,914
  -5,158
  -5,415
  -5,685
  -5,970
  -6,270
  -6,586
  -6,919
  -7,269
  -7,637
  -8,024
  -8,432
  -8,860

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,490
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  31,094
  29,369
  30,230
  31,178
  32,214
  33,339
  34,553
  35,859
  37,257
  38,751
  40,343
  42,037
  43,835
  45,742
  47,762
  49,899
  52,157
  54,543
  57,061
  59,717
  62,517
  65,468
  68,577
  71,850
  75,297
  78,923
  82,739
  86,753
  90,975
  95,414
  100,081
Adjusted assets (=assets-cash), $m
  28,604
  29,369
  30,230
  31,178
  32,214
  33,339
  34,553
  35,859
  37,257
  38,751
  40,343
  42,037
  43,835
  45,742
  47,762
  49,899
  52,157
  54,543
  57,061
  59,717
  62,517
  65,468
  68,577
  71,850
  75,297
  78,923
  82,739
  86,753
  90,975
  95,414
  100,081
Revenue / Adjusted assets
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
  0.149
Average production assets, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Working capital, $m
  1,425
  -389
  -401
  -413
  -427
  -442
  -458
  -476
  -494
  -514
  -535
  -557
  -581
  -607
  -633
  -662
  -692
  -723
  -757
  -792
  -829
  -868
  -909
  -953
  -999
  -1,047
  -1,097
  -1,150
  -1,206
  -1,265
  -1,327
Total debt, $m
  7,275
  6,938
  7,325
  7,752
  8,218
  8,725
  9,271
  9,858
  10,488
  11,160
  11,876
  12,639
  13,448
  14,306
  15,215
  16,176
  17,193
  18,266
  19,399
  20,595
  21,855
  23,183
  24,582
  26,055
  27,605
  29,237
  30,955
  32,761
  34,661
  36,658
  38,759
Total liabilities, $m
  13,553
  13,216
  13,603
  14,030
  14,496
  15,003
  15,549
  16,136
  16,766
  17,438
  18,154
  18,917
  19,726
  20,584
  21,493
  22,454
  23,471
  24,544
  25,677
  26,873
  28,133
  29,461
  30,860
  32,333
  33,883
  35,515
  37,233
  39,039
  40,939
  42,936
  45,037
Total equity, $m
  17,541
  16,153
  16,626
  17,148
  17,718
  18,336
  19,004
  19,722
  20,491
  21,313
  22,189
  23,120
  24,109
  25,158
  26,269
  27,444
  28,687
  29,999
  31,383
  32,844
  34,384
  36,008
  37,717
  39,518
  41,413
  43,408
  45,506
  47,714
  50,036
  52,478
  55,045
Total liabilities and equity, $m
  31,094
  29,369
  30,229
  31,178
  32,214
  33,339
  34,553
  35,858
  37,257
  38,751
  40,343
  42,037
  43,835
  45,742
  47,762
  49,898
  52,158
  54,543
  57,060
  59,717
  62,517
  65,469
  68,577
  71,851
  75,296
  78,923
  82,739
  86,753
  90,975
  95,414
  100,082
Debt-to-equity ratio
  0.415
  0.430
  0.440
  0.450
  0.460
  0.480
  0.490
  0.500
  0.510
  0.520
  0.540
  0.550
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.620
  0.630
  0.640
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
Adjusted equity ratio
  0.526
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,140
  -2,395
  -2,473
  -2,559
  -2,653
  -2,755
  -2,866
  -2,985
  -3,113
  -3,249
  -3,395
  -3,538
  -3,703
  -3,877
  -4,062
  -4,258
  -4,465
  -4,684
  -4,914
  -5,158
  -5,415
  -5,685
  -5,970
  -6,270
  -6,586
  -6,919
  -7,269
  -7,637
  -8,024
  -8,432
  -8,860
Depreciation, amort., depletion, $m
  2,395
  12
  12
  12
  12
  12
  12
  12
  12
  12
  12
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  989
  -2,383
  -2,461
  -2,547
  -2,641
  -2,744
  -2,854
  -2,973
  -3,101
  -3,238
  -3,383
  -3,538
  -3,703
  -3,877
  -4,062
  -4,258
  -4,465
  -4,684
  -4,914
  -5,158
  -5,415
  -5,685
  -5,970
  -6,270
  -6,586
  -6,919
  -7,269
  -7,637
  -8,024
  -8,432
  -8,860
Change in working capital, $m
  -84
  -10
  -11
  -13
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -51
  -53
  -56
  -59
  -62
Cash from operations, $m
  1,073
  -2,373
  -2,450
  -2,535
  -2,628
  -2,729
  -2,838
  -2,956
  -3,083
  -3,218
  -3,362
  -3,516
  -3,679
  -3,852
  -4,036
  -4,230
  -4,435
  -4,652
  -4,881
  -5,123
  -5,377
  -5,646
  -5,929
  -6,227
  -6,541
  -6,871
  -7,218
  -7,584
  -7,968
  -8,373
  -8,798
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
New CAPEX, $m
  -1,245
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from investing activities, $m
  -874
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Free cash flow, $m
  199
  -2,373
  -2,450
  -2,535
  -2,628
  -2,729
  -2,838
  -2,956
  -3,083
  -3,218
  -3,362
  -3,516
  -3,679
  -3,852
  -4,036
  -4,230
  -4,435
  -4,652
  -4,881
  -5,123
  -5,377
  -5,646
  -5,929
  -6,227
  -6,541
  -6,871
  -7,218
  -7,584
  -7,968
  -8,373
  -8,798
Issuance/(repayment) of debt, $m
  -1
  349
  387
  427
  466
  506
  546
  587
  629
  672
  717
  762
  809
  858
  909
  962
  1,016
  1,074
  1,133
  1,195
  1,260
  1,328
  1,399
  1,473
  1,551
  1,632
  1,717
  1,806
  1,900
  1,998
  2,100
Issuance/(repurchase) of shares, $m
  1,236
  636
  2,536
  2,629
  2,731
  2,841
  2,960
  3,087
  3,223
  3,367
  3,521
  3,685
  3,859
  4,043
  4,238
  4,443
  4,661
  4,891
  5,133
  5,388
  5,657
  5,941
  6,240
  6,554
  6,885
  7,234
  7,600
  7,985
  8,391
  8,817
  9,265
Cash from financing (excl. dividends), $m  
  1,236
  985
  2,923
  3,056
  3,197
  3,347
  3,506
  3,674
  3,852
  4,039
  4,238
  4,447
  4,668
  4,901
  5,147
  5,405
  5,677
  5,965
  6,266
  6,583
  6,917
  7,269
  7,639
  8,027
  8,436
  8,866
  9,317
  9,791
  10,291
  10,815
  11,365
Total cash flow (excl. dividends), $m
  1,431
  -2,024
  -2,062
  -2,108
  -2,161
  -2,223
  -2,292
  -2,369
  -2,453
  -2,546
  -2,646
  -2,754
  -2,870
  -2,994
  -3,127
  -3,268
  -3,419
  -3,578
  -3,748
  -3,927
  -4,117
  -4,318
  -4,530
  -4,754
  -4,990
  -5,239
  -5,501
  -5,778
  -6,069
  -6,375
  -6,698
Retained Cash Flow (-), $m
  1,012
  -416
  -473
  -522
  -570
  -619
  -668
  -718
  -769
  -822
  -876
  -931
  -989
  -1,049
  -1,111
  -1,175
  -1,242
  -1,312
  -1,385
  -1,461
  -1,540
  -1,623
  -1,710
  -1,800
  -1,895
  -1,995
  -2,099
  -2,208
  -2,322
  -2,442
  -2,567
Prev. year cash balance distribution, $m
 
  1,804
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  94.8
  78.0
  64.1
  52.6
  43.1
  35.3
  28.9
  23.6
  19.3
  15.7
  12.8
  10.4
  8.5
  6.9
  5.6
  4.5
  3.7
  3.0
  2.4
  1.9
  1.6
  1.3
  1.0
  0.8
  0.7
  0.5
  0.4
  0.4
  0.3
  0.2

Marathon Oil Corporation operates as an energy company. It operates through three segments: North America E&P, International E&P, and Oil Sands Mining. The North America E&P segment develops, explores for, produces, and markets crude oil and condensate, natural gas liquids (NGLs), and natural gas in North America. The International E&P segment explores for, produces, and markets crude oil and condensate, NGLs, and natural gas in Equatorial Guinea, Gabon, the Kurdistan Region of Iraq, Libya, and the United Kingdom; and produces and markets products manufactured from natural gas, such as liquefied natural gas and methanol in Equatorial Guinea. The Oil Sands Mining segment mines, extracts, and transports bitumen from oil sands deposits in Alberta, Canada; and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil. As of December 31, 2016, it had rights to participate in developed and undeveloped surface mineable leases totaling approximately 31,000 net acres. The company was formerly known as USX Corporation and changed its name to Marathon Oil Corporation in July 2001. Marathon Oil Corporation was founded in 1887 and is headquartered in Houston, Texas.

FINANCIAL RATIOS  of  Marathon Oil (MRO)

Valuation Ratios
P/E Ratio -6
Price to Sales 3
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow -74.7
Growth Rates
Sales Growth Rate -25.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -64.2%
Cap. Spend. - 3 Yr. Gr. Rate -22.5%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 37.6%
Total Debt to Equity 41.5%
Interest Coverage -2
Management Effectiveness
Return On Assets -4.7%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital -8.5%
Ret/ On T. Cap. - 3 Yr. Avg. -1.8%
Return On Equity -11.9%
Return On Equity - 3 Yr. Avg. -2.6%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 62.6%
Gross Margin - 3 Yr. Avg. 61.6%
EBITDA Margin 36%
EBITDA Margin - 3 Yr. Avg. 27.1%
Operating Margin -21.1%
Oper. Margin - 3 Yr. Avg. -18%
Pre-Tax Margin -29%
Pre-Tax Margin - 3 Yr. Avg. -22.8%
Net Profit Margin -50.2%
Net Profit Margin - 3 Yr. Avg. -20.6%
Effective Tax Rate -73.3%
Eff/ Tax Rate - 3 Yr. Avg. -6.3%
Payout Ratio -7.6%

MRO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MRO stock intrinsic value calculation we used $4261 million for the last fiscal year's total revenue generated by Marathon Oil. The default revenue input number comes from 2016 income statement of Marathon Oil. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MRO stock valuation model: a) initial revenue growth rate of 2.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.6%, whose default value for MRO is calculated based on our internal credit rating of Marathon Oil, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Marathon Oil.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MRO stock the variable cost ratio is equal to 146.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MRO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.2% for Marathon Oil.

Corporate tax rate of 27% is the nominal tax rate for Marathon Oil. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MRO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MRO are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Marathon Oil operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MRO is equal to -8.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17541 million for Marathon Oil - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 844.304 million for Marathon Oil is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Marathon Oil at the current share price and the inputted number of shares is $12.8 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
COP ConocoPhillips 47.74 7.09  str.sell
CVX Chevron 104.89 18.69  str.sell
APC Anadarko Petro 59.29 5.48  str.sell
HES Hess Corp. 47.31 11.36  str.sell
TOT Total ADR 49.94 9.83  str.sell
XOM Exxon Mobil 80.69 10.30  str.sell
WNR Western Refini 33.90 25.18  sell
MUR Murphy Oil 26.97 7.04  str.sell

COMPANY NEWS

▶ Are Institutional Investors Bailing on Marathon Oil?   [Apr-21-17 10:35AM  Market Realist]
▶ Chart in Focus: Marathon Oils Lifting Costs   [09:05AM  Market Realist]
▶ Better Buy: Apache Corp. vs. Marathon Oil   [07:46AM  Motley Fool]
▶ Asian shares gain on oil price rebound, strong Japan exports   [Apr-19-17 11:49PM  Associated Press]
▶ New Mexico assets capture attention of oil and gas giants   [Apr-18-17 04:34PM  Associated Press]
▶ Bulls bid on eBay & one energy name   [Apr-12-17 01:40PM  CNBC Videos]
▶ How Marathon Oil Stock Performed in 1Q17   [08:11AM  Market Realist]
▶ [$$] Goodbye to the Great White North   [Apr-01-17 12:01AM  Barrons.com]
▶ [$$] Goodbye to the Great White North   [12:01AM  at Barrons.com]
▶ Is Marathon Oil Ready to Run?   [Mar-29-17 04:29PM  TheStreet.com]
▶ [$$] Plenty of Cash Lies Buried on Canadas Oil Sands   [12:15AM  at The Wall Street Journal]
▶ [$$] Plenty of Cash Lies Buried on Canada's Oil Sands   [05:40PM  at The Wall Street Journal]
▶ Houston LNG company secures foundation shippers for new pipeline   [Mar-17-17 06:00PM  at bizjournals.com]
Stock chart of MRO Financial statements of MRO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.