Oil and natural gas exploration and production firm
Marathon Oil Corporation
) is set to release its fourth-quarter 2012 results before the
opening bell tomorrow, Wednesday, Feb 6.
In the preceding quarter, Marathon Oil delivered a negative
1.54% earnings surprise, as crude oil and natural gas prices
dropped. Let's see how things are shaping up prior to this
Factors to Consider This Quarter
The transfer of the downstream assets (post-split) has left
Marathon with a less diversified business. As a result, the
business risk profile of the reorganized Marathon is weaker than
that of the pre-spin-off company.
Moreover, a lackluster production growth outlook and the
recent high priced acquisition of acreage in the Eagle Ford shale
formation in South Texas may also limit Marathon Oil's ability to
generate positive earnings surprise in the to-be-reported
Our proven model does not conclusively show that Marathon Oil
is likely to beat the Zacks Consensus Estimate in the fourth
quarter. That is because a stock needs to have both a positive
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2
(Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately
this is not the case here as elaborated below.
Negative Zacks ESP:
This is because the Most Accurate estimate stands at 68 cents,
while the Zacks Consensus is higher at 69 cents. This results in
a difference of -1.45%.
Zacks Rank #3 (Hold):
Marathon Oil's Zacks Rank #3 (Hold), however, increases the
predictive power of ESP. That said, we also need to have a
positive ESP to be confident of an earnings surprise call.
Other Stocks to Consider
Here are some other firms you may want to consider on the
basis of our model, which shows that they have the right
combination of elements to post an earnings beat this
Northern Tier Energy L.P.
), Earnings ESP of +7.97% and Zacks Rank #1 (Strong Buy).
Hercules Offshore Inc.
), Earnings ESP of +14.29% and Zacks Rank #2 (Buy).
Sunoco Logistics L.P.
), Earnings ESP of +7.69% and Zacks Rank #2 (Buy).
HERCULES OFFSHR (HERO): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
NORTHERN TIER (NTI): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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