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GuruFocus has detected 2 Warning Signs with Marathon Oil Corp $MRO.
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Marathon Oil Corp (NYSE:MRO)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Marathon Oil Corp has an F-score of 5 indicating the company's financial situation is typical for a stable company.

MRO' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Marathon Oil Corp was 8. The lowest was 3. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Net Income was -407 + -170 + -192 + -1371 = $-2,140 Mil.
Cash Flow from Operations was 74 + 178 + 366 + 455 = $1,073 Mil.
Revenue was 730 + 1302 + 1229 + 1389 = $4,650 Mil.
Gross Profit was 235 + 769 + 665 + 875 = $2,544 Mil.
Average Total Assets from the begining of this year (Dec15)
to the end of this year (Dec16) was
(32311 + 32868 + 32527 + 32310 + 31094) / 5 = $32222 Mil.
Total Assets at the begining of this year (Dec15) was $32,311 Mil.
Long-Term Debt was $6,589 Mil.
Total Current Assets was $3,665 Mil.
Total Current Liabilities was $2,240 Mil.
Net Income was -276 + -386 + -749 + -793 = $-2,204 Mil.

Revenue was 1532 + 1531 + 1323 + 1475 = $5,861 Mil.
Gross Profit was 776 + 818 + 740 + 826 = $3,160 Mil.
Average Total Assets from the begining of last year (Dec14)
to the end of last year (Dec15) was
(35983 + 34736 + 35770 + 34674 + 32311) / 5 = $34694.8 Mil.
Total Assets at the begining of last year (Dec14) was $35,983 Mil.
Long-Term Debt was $7,276 Mil.
Total Current Assets was $2,590 Mil.
Total Current Liabilities was $1,729 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Marathon Oil Corp's current net income (TTM) was -2,140. ==> Negative ==> Score 0.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Marathon Oil Corp's current cash flow from operations (TTM) was 1,073. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec15)
=-2140/32311
=-0.06623131

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=-2204/35983
=-0.06125115

Marathon Oil Corp's return on assets of this year was -0.06623131. Marathon Oil Corp's return on assets of last year was -0.06125115. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Marathon Oil Corp's current net income (TTM) was -2,140. Marathon Oil Corp's current cash flow from operations (TTM) was 1,073. ==> 1,073 > -2,140 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Dec16)=Long-Term Debt/Average Total Assets from Dec15 to Dec16
=6589/32222
=0.20448762

Gearing (Last Year: Dec15)=Long-Term Debt/Average Total Assets from Dec14 to Dec15
=7276/34694.8
=0.20971442

Marathon Oil Corp's gearing of this year was 0.20448762. Marathon Oil Corp's gearing of last year was 0.20971442. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Dec16)=Total Current Assets/Total Current Liabilities
=3665/2240
=1.63616071

Current Ratio (Last Year: Dec15)=Total Current Assets/Total Current Liabilities
=2590/1729
=1.49797571

Marathon Oil Corp's current ratio of this year was 1.63616071. Marathon Oil Corp's current ratio of last year was 1.49797571. ==> This year's current ratio is higher. ==> Score 1.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Marathon Oil Corp's number of shares in issue this year was 819. Marathon Oil Corp's number of shares in issue last year was 677. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=2544/4650
=0.54709677

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3160/5861
=0.53915714

Marathon Oil Corp's gross margin of this year was 0.54709677. Marathon Oil Corp's gross margin of last year was 0.53915714. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Dec15)
=4650/32311
=0.14391384

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec14)
=5861/35983
=0.16288247

Marathon Oil Corp's asset turnover of this year was 0.14391384. Marathon Oil Corp's asset turnover of last year was 0.16288247. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=0+1+0+1+1+1+0+1+0
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Marathon Oil Corp has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Marathon Oil Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Question 1 1111111100
Question 2 1111111111
Question 3 0001100100
Question 4 1111111111
Question 5 0101101101
Question 6 0111010111
Question 7 1010011110
Question 8 0001111001
Question 9 0000010000
F-score 4557676745

Marathon Oil Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Question 1 1111000000
Question 2 1111111111
Question 3 1100000000
Question 4 1111111111
Question 5 1110000001
Question 6 1101111111
Question 7 1111110000
Question 8 1000000001
Question 9 1000000000
F-score 9755443335
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