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Is Marathon Oil (MRO) a Great Value Stock Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Marathon Oil (MRO). MRO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 6.29. This compares to its industry's average Forward P/E of 7.89. Over the past year, MRO's Forward P/E has been as high as 30.69 and as low as 5.50, with a median of 9.67.

Another valuation metric that we should highlight is MRO's P/B ratio of 1.75. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.63. Over the past year, MRO's P/B has been as high as 1.90 and as low as 0.79, with a median of 1.15.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MRO has a P/S ratio of 2.79. This compares to its industry's average P/S of 3.9.

If you're looking for another solid Oil and Gas - Integrated - United States value stock, take a look at Occidental Petroleum (OXY). OXY is a # 2 (Buy) stock with a Value score of A.

Shares of Occidental Petroleum currently holds a Forward P/E ratio of 7.39, and its PEG ratio is 0.22. In comparison, its industry sports average P/E and PEG ratios of 7.89 and 0.35.

Over the last 12 months, OXY's P/E has been as high as 213.02, as low as -117.16, with a median of 10.86, and its PEG ratio has been as high as 9.92, as low as -5.45, with a median of 0.29.

Occidental Petroleum sports a P/B ratio of 5.76 as well; this compares to its industry's price-to-book ratio of 2.63. In the past 52 weeks, OXY's P/B has been as high as 5.76, as low as 2.42, with a median of 3.20.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Marathon Oil and Occidental Petroleum are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MRO and OXY feels like a great value stock at the moment.


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Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
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