Marathon Oil Corporation (MRO) Stock Valuation — PE Analysis
Oil & Gas Exploration & Production · NYSE
Current Price
$28.55
PE Ratio (TTM)
11.2x
Intrinsic Value
$24.78
-15.2% margin of safety
COMPETITIVE MOAT
↑Low-Cost Production Assets
MRO possesses a portfolio of high-quality, low-cost oil and gas assets, particularly in the Eagle Ford and Permian Basins. This allows for profitable production even during periods of lower commodity prices.
↑Operational Efficiency Focus
The company demonstrates a strong commitment to operational efficiency and cost discipline. This focus helps to maximize margins and cash flow generation from its existing production base.
↑Disciplined Capital Allocation
MRO prioritizes returning capital to shareholders through dividends and share buybacks, alongside prudent reinvestment in its core assets. This shareholder-friendly approach fosters investor confidence.
INVESTMENT RISKS
↓Commodity Price Volatility
As an oil and gas producer, MRO's financial performance is highly sensitive to fluctuations in crude oil and natural gas prices. Significant price drops can negatively impact revenue and profitability.
↓Regulatory and Environmental Scrutiny
The energy industry faces increasing regulatory and environmental pressures. Changes in climate policy or stricter environmental regulations could lead to increased compliance costs and operational challenges.
↓Geopolitical Instability
Global geopolitical events can disrupt supply chains and impact energy demand, leading to price volatility and potential operational disruptions for MRO.
Base case
MRO base case PE valuation
A base case PE valuation for MRO estimates a fair value of about $24.78 per share, against a current price of $28.55. The model assumes -2.2% annual earnings growth, a 11x target PE multiple, and a 10% discount rate.
Intrinsic Value
$24.78
Margin of safety
-15.2%
Expected annual return
-2.8%
Base case assumptions: -2.2% annual earnings growth, 11x target PE, 10% discount rate, 5 year projection. Data as of 2024-11-21.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the MRO PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Marathon Oil Corporation respond.
Open PE Calculator for MROCompany Overview
Marathon Oil Corporation operates as an independent upstream energy company, primarily focusing on exploration, development, and production activities within the United States and international markets. The firm is engaged in discovering, extracting, and commercializing crude oil, condensate, natural gas liquids (NGLs), and natural gas. Additionally, it manufactures and sells refined natural gas products such as liquefied natural gas (LNG) and methanol. Its operational assets include 32 central gathering and treatment facilities, along with the Sugarloaf natural gas pipeline, a 42-mile system traversing Karnes and Atascosa Counties. Established in 1887, the company was formerly USX Corporation before rebranding to Marathon Oil Corporation in December 2001. Its corporate headquarters are located in Houston, Texas.
Financial Metrics — MRO PE Stock Valuation Data
PE Ratio (TTM)
11.2x
PEG Ratio
n/m
Earnings Yield
8.97%
ROE (TTM)
13.8%
Revenue/Share (TTM)
$10.56
Dividend Yield
1.54%
Debt/Equity
0.48x
Frequently Asked Questions
What is the PE ratio of MRO?
The trailing twelve-month PE ratio of MRO reflects how much investors pay per dollar of Marathon Oil Corporation's earnings. This metric is most useful when compared to Oil & Gas Exploration & Production peers and the company's own historical range.
Is MRO overvalued based on PE ratio?
MRO's PE of 11.2x combined with a PEG ratio of -0.81 provides a growth-adjusted perspective. MRO has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Oil & Gas Exploration & Production, a DCF analysis may be more appropriate.
How do I value MRO stock using PE ratio?
To value Marathon Oil Corporation using PE: (1) Compare the current PE (11.2x) against the Oil & Gas Exploration & Production median to assess relative pricing, (2) check the PEG ratio (-0.81) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of MRO?
MRO's PEG ratio is -0.81, calculated by dividing the PE ratio (11.2x) by the expected earnings growth rate. Because MRO has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for MRO stock valuation?
PE ratio gives a quick relative read — how MRO is priced versus Oil & Gas Exploration & Production peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See MRO DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Energy valuationsP/E and DCF value MRO with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2024-11-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.