As of June 10, 2025, Marathon Oil Corp's estimated intrinsic value ranges from $21.47 to $107.80 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $42.66 | +49.4% |
| Discounted Cash Flow (5Y) | $37.13 | +30.0% |
| Dividend Discount Model (Multi-Stage) | $27.12 | -5.0% |
| Dividend Discount Model (Stable) | $21.47 | -24.8% |
| Earnings Power Value | $107.80 | +277.6% |
Is Marathon Oil Corp (MRO) undervalued or overvalued?
With the current market price at $28.55, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Marathon Oil Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.01 | 1.17 |
| Cost of equity | 8.5% | 11.4% |
| Cost of debt | 4.8% | 4.8% |
| Tax rate | 5.2% | 10.9% |
| Debt/Equity ratio | 0.34 | 0.34 |
| After-tax WACC | 7.5% | 9.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $37 | $25,389M | 72.2% |
| 10-Year Growth | $43 | $28,482M | 50.9% |
| 5-Year EBITDA | $35 | $24,074M | 70.7% |
| 10-Year EBITDA | $41 | $27,422M | 49.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $5,479M |
| Discount Rate (WACC) | 9.6% - 7.5% |
| Enterprise Value | $56,941M - $72,903M |
| Net Debt | $4,619M |
| Equity Value | $52,322M - $68,284M |
| Outstanding Shares | 559M |
| Fair Value | $94 - $122 |
| Selected Fair Value | $107.80 |
| Metric | Value |
|---|---|
| Market Capitalization | $15971M |
| Enterprise Value | $20590M |
| Trailing P/E | 12.01 |
| Forward P/E | 8.96 |
| Trailing EV/EBITDA | 5.40 |
| Current Dividend Yield | 158.41% |
| Dividend Growth Rate (5Y) | 11.57% |
| Debt-to-Equity Ratio | 0.34 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $12.80 |
| Discounted Cash Flow (5Y) | 25% | $9.28 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.42 |
| Dividend Discount Model (Stable) | 15% | $3.22 |
| Earnings Power Value | 10% | $10.78 |
| Weighted Average | 100% | $41.50 |
Based on our comprehensive valuation analysis, Marathon Oil Corp's weighted average intrinsic value is $41.50, which is approximately 45.4% above the current market price of $28.55.
Key investment considerations:
Given these factors, we believe Marathon Oil Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.