Back to top

Image: Bigstock

Is a Beat in Store for Marathon Oil's (MRO) Q4 Earnings?

Read MoreHide Full Article

Marathon Oil Corporation (MRO - Free Report) is scheduled to release fourth-quarter 2019 results on Feb 12, after the closing bell.

The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is 8 cents per share on revenues of $1.27 billion.

Against this backdrop, let’s delve into the factors that might have impacted the company’s performance in the December quarter.

As far as earnings surprises are concerned, this Houston, Texas-based Marathon Oil boasts an excellent record, having surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 197.8%. 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-eps-surprise | Marathon Oil Corporation Quote

Factors at Play

Strong operational performance at Marathon Oil’s US resource basin division, which is responsible for more than three-fourth of the total production, is likely to have contributed to the fourth-quarter bottom line. In the previous three-month period, the company’s output of oil and natural gas increased 11.5% from the prior-year’s corresponding period, a trend that most likely continued in the fourth quarter as well owing to focused capital spending. Evidently, the Zacks Consensus Estimate for fourth-quarter net sales volume from the United States is pegged at 332 Boe/d, indicating an increase of 8.85% from the year-ago reported figure.

Importantly, volume growth is likely to have been achieved on lower costs. During the third quarter, Marathon Oil’s U.S. production costs were down 23% from the year-ago period to $4.75 per Boe. Continued progress on the cost front, primarily on account of portfolio optimization efforts, might have aided the company’s bottom-line growth in the to-be-reported quarter despite a weak oil price environment.

 What Does Our Model Say?

The proven Zacks model predicts an earnings beat for Marathon Oil this season. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Marathon Oil has an Earnings ESP of +3.90%.

Zacks Rank: Marathon Oil carries a Zacks Rank #2, which increases the predictive power of ESP.

Highlights of Q3 Earnings

Marathon Oildelivered stellar third-quarter 2019 results wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Better-than-expected net sales volumes led to this outperformance. Precisely, the same totalled 427 thousand barrels of oil equivalent per day (MBOE/d), topping the Zacks Consensus Estimate of 394 MBOE/d.

Its adjusted income from continuing operations came in at 14 cents per share, outpacing the Zacks Consensus Estimate of 4 cents. However, the metric plunged nearly 42% from the year-ago earnings of 24 cents. Notably, decreased average price realizations of crude oil and condensate from the International E&P segment induced this year-over-year fall.

However, quarterly revenues of $1,345 million beat the Zacks Consensus Estimate of $1,264 million. But the top line was 19.3% lower than the prior-year figure of $1,667 million.

Other Stocks to Consider

Here are some other stocks worth considering from the energy space as per our model shows that these too have the perfect combination of elements to beat on earnings this reporting cycle:

Viper Energy Partners L.P. (VNOM - Free Report) has an Earnings ESP of +20.74% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings on Feb 11.

TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.65% and a Zacks Rank of 2. The company is slated to announce fourth-quarter 2019 earnings on Feb 13.

Tallgrass Energy GP, L.P. (TGE - Free Report) has an Earnings ESP of +2.06% and is Zacks #2 Ranked. The partnership is slated to release fourth-quarter earnings on Feb 12. You can see the complete list of today’s Zacks #1 Rank stocks here.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>

Published in