As of October 1, 2025, Marathon Oil Corp's estimated intrinsic value ranges from $23.19 to $115.50 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $46.52 | +63.0% |
| Discounted Cash Flow (5Y) | $40.49 | +41.8% |
| Dividend Discount Model (Multi-Stage) | $29.73 | +4.1% |
| Dividend Discount Model (Stable) | $23.19 | -18.8% |
| Earnings Power Value | $115.50 | +304.5% |
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 | 0.9 | 1 |
| Cost of equity | 8.0% | 10.5% |
| Cost of debt | 4.8% | 4.8% |
| Tax rate | 5.2% | 10.9% |
| Debt/Equity ratio | 0.34 | 0.34 |
| After-tax WACC | 7.1% | 8.9% |
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 | $40 | $27,270M | 73.8% |
| 10-Year Growth | $47 | $30,645M | 53.3% |
| 5-Year EBITDA | $31 | $21,793M | 67.2% |
| 10-Year EBITDA | $39 | $26,181M | 45.4% |
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) | 8.9% - 7.1% |
| Enterprise Value | $61,686M - $76,773M |
| Net Debt | $4,619M |
| Equity Value | $57,067M - $72,154M |
| Outstanding Shares | 559M |
| Fair Value | $102 - $129 |
| Selected Fair Value | $115.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $15971M |
| Enterprise Value | $20590M |
| Trailing P/E | 12.01 |
| Forward P/E | 8.96 |
| Trailing EV/EBITDA | 4.55 |
| 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% | $13.96 |
| Discounted Cash Flow (5Y) | 25% | $10.12 |
| Dividend Discount Model (Multi-Stage) | 20% | $5.95 |
| Dividend Discount Model (Stable) | 15% | $3.48 |
| Earnings Power Value | 10% | $11.55 |
| Weighted Average | 100% | $45.05 |
Based on our comprehensive valuation analysis, Marathon Oil Corp's intrinsic value is $45.05, which is approximately 57.8% 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.