Opinions
Jim Cramer - Mad Money
Marathon Oil
MRO-N
BUY
Sep 18, 2023
Stock price when the opinion was issued
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It's okay. It got an upgrade today and shares will probably go higher. He prefers Chevron, though.
Trades at a low PE, but is a value trap and is highly cyclical. Their EPS leapt from $3.79 in 20167 to -$1.52 in 2020 to $26.63 last year! Up, down and up big. It's almost impossible to repeat 2022 numbers. Marathon has had a big share buyback. The dividend did grow a little. Today, shares are hitting 5-year highs. However, future 2025 EPS estimates are sliding to less than half of 2022's peaks, because of less demand for oil and gas. Also, the existential long-term obstacle are EV's. Consider the massive clean-energy incentives in Biden's 2022 IRA. It's possible earnings have already peaked--big warning.
Shares outpace peers Valero and Phillips 66 because they have bought back more shares this year, at 14.7%. If the price of oil declines, refiners like MRO will do well, because the gas price never falls as fast as oil, and so the wider the spread the more money the refiners make.