Marathon Oil Corporation : Overview of Business and Intrinsic value of Shares

 

 

 

Marathon Oil https://www.marathonoil.com is proud to responsibly produce the oil and gas the world needs while helping maintain the U.S. energy security. Being a safe and ethical operator mindful of its neighbours and communities is foundational to its business and for creating long-term value for all Marathon Oil stakeholders. Marathon Oil started in 1887, from the beginning it has operated as integrated oil company. Marathon Oil Corporation stock trade on the Newyork Stock Exchange under the ticker symbol :MRO

 

FCFE Details of Marathon Oil Corporation shown below, US$ in millions, except per share data

Year	Value	FCFE or Terminal Value	Present Value at 16.9%
0	FCFE0	1911	1911
1	FCFE1	2131	1635
2	FCFE2	2404	1559
3	FCFE3	2743	1505
4	FCFE4	3166	1469
5	FCFE5	3325	1451
5	Terminal Value (TV5)	29340	9530

Intrinsic value of Marathon Oil Corporation	$22970
Market cap of Marathon Oil Corporation	$1.351 Trillion
Intrinsic value of Marathon Oil Corporation common stock (per share)	$40.58
Current share price on 11/11/2024	$28.62

 

Required rate of Return

Assumptions

Rate of return on LT Treasury Composite(Rf)	4.36%
Expected rate of return on market portfolio(E(RM)	13.81%
Systematic risk of Marathon Oil Corporation. Common stock (β)	1.33
Required rate of return on Marathon Oil Corporation Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.36% +1.33[13.81% - 4.36%]	16.9%

 

 

 

 

 

FCFE Growth rate Forecast

Marathon Oil Corporation. H-Model

Year	Value	Growth Rate
1	g1 (PRAT Model)	11.52%
2	g2 (Linear Interpolation)	12.82%
3	g3 (Linear Interpolation)	14.12%
4	g4 (Linear Interpolation)	15.42%
5	g5 (Single stage model)	5.00%

 

2023 Calculations

Retention rate	83.8%
Dividend yield	1.86%
Profit margin	23.2%
Return on Equity	13.8%
Asset turnover	0.34
Financial Leverage	1.74
EPS	2.74
PE Ratio	10.4

 

 

 

 

 

 

 

 

 

Sources : Form 10K of Marathon Oil Corporation for the fiscal year 2023https://www.marathonoil.com/, https://www.stock-analysis-on.net/ , https://finance.yahoo.com/ , https://companiesmarketcap.com/

 

 

Disclosures

This report is based on information obtained in good faith from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments.