Head-To-Head Analysis: Range Resources (RRC) versus Marathon Oil (MRO)

Range Resources (NYSE: RRC) and Marathon Oil (NYSE:MRO) are both oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Range Resources and Marathon Oil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Range Resources 8.24% 4.36% 2.13%
Marathon Oil -7.56% -0.50% -0.26%

Valuation and Earnings

This table compares Range Resources and Marathon Oil’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Range Resources $2.61 billion 1.61 $333.14 million $0.58 29.10
Marathon Oil $4.77 billion 3.85 -$5.72 billion ($0.38) -56.53

Range Resources has higher earnings, but lower revenue than Marathon Oil. Marathon Oil is trading at a lower price-to-earnings ratio than Range Resources, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and target prices for Range Resources and Marathon Oil, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Range Resources 3 12 11 0 2.31
Marathon Oil 0 11 11 0 2.50

Range Resources currently has a consensus price target of $22.36, suggesting a potential upside of 32.45%. Marathon Oil has a consensus price target of $19.11, suggesting a potential downside of 11.05%. Given Range Resources’ higher possible upside, equities analysts clearly believe Range Resources is more favorable than Marathon Oil.

Institutional and Insider Ownership

96.0% of Range Resources shares are owned by institutional investors. Comparatively, 78.5% of Marathon Oil shares are owned by institutional investors. 1.3% of Range Resources shares are owned by company insiders. Comparatively, 0.4% of Marathon Oil shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Range Resources has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Marathon Oil has a beta of 2.33, indicating that its stock price is 133% more volatile than the S&P 500.

Dividends

Range Resources pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. Marathon Oil pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Range Resources pays out 13.8% of its earnings in the form of a dividend. Marathon Oil pays out -52.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Marathon Oil is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Range Resources beats Marathon Oil on 9 of the 15 factors compared between the two stocks.

Range Resources Company Profile

Range Resources Corporation operates as an independent natural gas, natural gas liquids (NGLs), and oil company. It engages in the exploration, development, and acquisition of natural gas and oil properties. It holds interests in developed and undeveloped natural gas and oil leases in the Appalachian and North Louisiana regions of the United States. The company owns 4,554 net producing wells and approximately 945,000 acres under lease in the Appalachian region; 415 net producing wells and approximately 233,000 net acres under lease in the North Louisiana region; and 151 net producing wells and approximately 195,000 net acres under lease in the Nemaha Uplift of Northern Oklahoma. It markets and sells natural gas to utilities, marketing and midstream companies, and industrial users; petrochemical end users, NGL distributors, and natural gas processors; and oil and condensate to crude oil processors, transporters, and refining and marketing companies. The company was formerly known as Lomak Petroleum, Inc. and changed its name to Range Resources Corporation in 1998. Range Resources Corporation founded in 1975 and is headquartered in Fort Worth, Texas.

Marathon Oil Company Profile

Marathon Oil Corporation operates as an energy company in the United States, Equatorial Guinea, the United Kingdom, and Libya. It operates in two segments, United States E&P and International E&P. The company engages in the exploration, production, and marketing of crude oil and condensate, natural gas liquids, and natural gas; and the production and marketing of products manufactured from natural gas, such as liquefied natural gas and methanol. As of December 31, 2017, it had estimated proved developed reserves totaling 903 million barrels of oil equivalent (mmboe); and estimated proved undeveloped reserves totaling 546 mmboe. The company was formerly known as USX Corporation and changed its name to Marathon Oil Corporation in July 2001. Marathon Oil Corporation was founded in 1887 and is headquartered in Houston, Texas.

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