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On Friday, an analysis of US integrated oil and gas stocks Marathon Oil (NYSE:) and Equitrans Midstream (NYSE:) was published, providing insights into their investment potential using the Zacks Rank system and traditional valuation metrics.
The Zacks Rank system granted Marathon Oil a “Buy” rank (#2), indicating a potentially strong investment opportunity. Equitrans Midstream, on the other hand, received a “Hold” rank (#3), suggesting investors might want to maintain their current positions in this stock. This ranking system further highlighted that Marathon Oil’s earnings outlook has seen a more significant improvement compared to Equitrans Midstream’s.
Adding to the analysis, real-time metrics from InvestingPro show that Marathon Oil’s market cap stands at an adjusted 16.2B USD. The company also has a P/E ratio of 8.37, which is lower than the forward P/E ratio of 10.65 mentioned in the article, suggesting an even more attractive valuation. Moreover, Marathon Oil has a P/B ratio of 1.43, which is even lower than the previously mentioned 1.51, potentially indicating a better value.
The article further compared the companies on several traditional valuation metrics often used by value investors to identify potentially undervalued stocks. These include the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, price/earnings to growth (PEG) ratio, and cash flow per share.
Marathon Oil exhibited a forward P/E ratio of 10.65, considerably lower than Equitrans Midstream’s 20.78. This could suggest that Marathon Oil’s shares are priced more reasonably relative to its earnings. The PEG ratio for Marathon Oil was also lower at 0.54 compared to Equitrans Midstream’s 1.17, potentially indicating better future earnings growth for Marathon Oil.
The analysis also considered the P/B ratios of the two companies. Marathon Oil’s P/B ratio was 1.51, significantly lower than Equitrans Midstream’s 2.92, possibly indicating that Marathon Oil’s stock is more reasonably priced relative to its book value.
Lastly, the article assigned a Value grade to each company based on their overall performance on these metrics. Marathon Oil received a Value grade of A, while Equitrans Midstream was awarded a Value grade of C. This grading system further supports the potential of Marathon Oil as a more attractive investment opportunity compared to Equitrans Midstream, based on the metrics used in this analysis.
In addition to the above metrics, InvestingPro Tips provide further insights into Marathon Oil’s performance. The company has a high earnings quality, with free cash flow exceeding net income. Moreover, its management has been aggressively buying back shares, which can be a sign of confidence in the company’s future. There are more tips available at InvestingPro, which can be accessed here. These tips can provide valuable guidance for investors seeking deeper insights into their potential investments.
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