This MRO stock forecast article was written by Emily Adelson – Analyst at I Know First.

Highlights: 

• Since November 2020, the company’s stock has grown by 215%
• MRO stock Buyback ratio is 2.5, which is higher than 93% of the companies in the industry
• The target price for MRO stock is $15 for the coming year

Overview:

Marathon Oil was founded as an independent exploitation and production company in July of 2011. Its headquarters are located in Houston Texas and is located by some of the largest oil plantations in the country, including Texas, North Dakota, Oklahoma, and New Mexico. MRO focuses on providing a sustainable method to produce oil and gas in mass quantities that is safe and ethical to the environment. Its services are highly multifaceted, ranging from the production of crude oil, natural gas, and oil sands; and partnered with Marathon Petroleum Corporation, headquartered in Findlay, Ohio, the two companies are engaged in the redefining and distribution of automotive fuel, engine oil. MRO has developed itself in 4 states with over 13 refineries and 2.5 million barrels of oil that are working to develop and produce the best quality oil and maximize profits and production efficiency.

MRO stock Adapts Energy Efficient Production

According to Yahoo Finance, U.S. oil prices finished at their highest levels in more than two and a half years after a weekly report from the Energy Information Administration (“EIA”) showed a big stockpile draw. The federal government’s EIA report revealed that crude inventories fell by 7.6 million barrels compared to expectations of a 6.3-million-barrel decline. An uptick in demand (or total products supplied) coupled with slightly lower production accounted for the larger-than-expected stockpile draw with the world’s biggest oil consumer. This puts total domestic stocks at 459.1 million barrels — 15.1% less than the year-ago figure and 6% lower than the five-year average. Moreover, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) were down 1.8 million barrels to 41.7 million barrels. The figure below represents: 1) a strong bullish trend on the oil market; 2) a positive price correlation between Brent’s price and MRO’s stock.

MRO is a sustainable company with approximately 1,670 employees and 3.1 billion in revenue. The company actively distributes money to shareholders through buybacks. According to GuruFocus MRO’s average share buyback ratio is 2.5 that higher than 93% of companies in the Oil & Gas industry. The need for oil decreased in the pandemic period because of the decrease in demand for commodity products that came about by the lack of need for products that required oil usage. The company lost around 40% of its revenue in 2020. According to the company result for the 1Q2021, MRO’s total net production came in at 345,000 barrels of oil equivalent per day (BOE/d) compared with 422,000 BOE/d in the year-ago period. Production costs were $4.46 per BOE, representing a 3.7% year-over-year decline.

As a reaction to the pandemic situation, the company got rid of its corporate aircraft, and reduced general and administrative expenses. So, CEO and Board compensation reduced by 25% in 2020. MRO is making significant progress on creating new ways to reduce its GHG emission by 25% compared to previous years when only 20% decrease in emission was generated. By 2025, they hope to have a target of reducing their emission levels by 30%, a unique feature compared to other competitor companies in the oil industry.

Taking into account the current bullish trend on the oil market, effective management decisions, which had been made as a reaction to the pandemic time and, current financial ratio values, it is reasonable to expect MRO’s stock growth in the future.      

What is the Current MRO Stock Trend?

As we can see in the chart, currently MRO’s stock price is on the uptrend and it is higher than all three moving averages (the purple line is MA-50; the green line is MA-100 and the blue line is MA-200). Currently, there is not a signal that the tendency will change from an uptrend to a downtrend.

Conclusion

I take a buy-side on MRO stock with a target price of $15 in 2022. After a catastrophic decline in production in 2020 due to the pandemic, the company continues to recover its revenue, which is directly related to the bullish oil market trend. During the pandemic, the company has optimized its general and administrative expenses business. The company continues to remain is one of the best companies in the Oil & Gas Industry by allocating money to investors through buybacks.

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the MRO stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with I Know First

I Know First has been bullish on the MRO stock forecast in the past. On April 1^st, 2021 the I Know First algorithm issued a forecast for MRO stock price and recommended MRO as one of the best consumer stocks to buy. The AI-driven MRO stock prediction was successful on a 3-months time horizon resulting in more than 32.68%.

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Please note-for trading decisions use the most recent forecast.