Can Marathon Oil’s Stock Maintain Its Rally after Its 1Q16 Earnings?

Did Marathon Oil’s 1Q16 Earnings Beat Analysts' Estimates?

(Continued from Prior Part)

Marathon Oil’s stock price action on the day of 1Q16 earnings

Marathon Oil (MRO) announced its 1Q16 earnings on May 4, 2016, after the Market closed. On the day of its earnings release, Marathon Oil’s stock price decreased by ~4.9% to close at $12.17. In after-hours price action, Marathon Oil’s stock price traded as high as $12.40 before trading closed.

In the last three months leading into the earnings, Marathon Oil’s stock price has already increased by a whopping ~81%, mainly due to the ~58% bounce in crude oil (USO) (SCO) (DWTI) prices during the same period.

Marathon Oil’s stock price trend change

Falling crude oil (UCO) and natural gas (UNG) (UGAZ) prices during the past two years have led to a falling trend in the entire upstream sector, and MRO was no exception.

However, since February 2016, as you can see in the above graph, Marathon Oil’s stock is in a new uptrend. It’s clearly making a pattern of higher highs and higher lows.

Marathon Oil’s relative performance

For 2016, MRO is underperforming other upstream companies. For 2016, MRO is down by ~3%. Among the other oil and gas producers like Laredo Petroleum (LPI), Sanchez Energy (SN), and QEP Resources (QEP) are up by ~41%, ~89%, and ~27%, respectively.

Marathon Oil’s stock price movement after past earnings beats

In the last year, there were three occasions—the 3Q15, 2Q15, and 1Q15 earnings—in which MRO beat the earnings expectations.

MRO’s 3Q15 post-earnings reaction was negative—Marathon Oil’s stock price decreased by ~11% in six sessions after beating the consensus earnings estimates by $0.21 per share.

A similar contrarian reaction was observed after 2Q15 and 1Q15 earnings also when Marathon Oil’s stock price decreased by ~28% and ~8% in three weeks and two weeks, respectively. This occurred even after beating the consensus earnings estimates by $0.01 per share and $0.09 per share, respectively.

Browse this series on Market Realist:

• Part 1 - Analyzing Marathon Oil’s 1Q16 Earnings Performance

• Part 2 - Marathon Oil’s 1Q16 Operational Performance, Management Strategies

• Part 3 - Wall Street Analysts Assess Marathon Oil after Its 1Q16 Earnings