Marathon Oil Corporation, Transocean LTD Outperform on Earnings

Marathon Oil Corporation (MRO) and Transocean LTD (RIG) are among the oil stocks on fire after earnings

Nov 3, 2016 at 10:38 AM
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On the back of upbeat earnings, oil stocks are soaring today. Among the major winners so far within the commodities sector are gas giant Marathon Oil Corporation (NYSE:MRO) and drilling dynamo Transocean LTD (NYSE:RIG). Below, we'll take a closer look at MRO and RIG, as well as the earnings results propelling them higher.

At last check, Marathon Oil shares have shot 13.4% higher to trade at $14.49. Last night, the oil company reported a narrower-than-expected quarterly loss, and announced plans to increase its rig count by 50%, catalyzing the stock's ascent this morning. In fact, since its mid-February 13-year lows, MRO has boomed 122%.

Today's gain should please bullish options bettors at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, Marathon Oil Corporation has racked up a 10-day call/put volume ratio of 2.70 -- outstripping 70% of all readings from the past year. In other words, speculators have bought to open calls over puts at a much faster-than-usual clip in recent weeks.

Turning to RIG, the stock is up 9.2% at $10.16, after the firm posted an earnings beat -- despite a nearly 50% drop in revenue (subscription required). Adding fuel to the fire, Canaccord Genuity raised its rating to "buy" from "hold," and bumped its price target by $2 to $11 -- territory not explored since early August.

While Transocean stock is up big this morning, it remains lower on a longer-term basis. Year-to-date, the shares have shed roughly 18% of their value, while their year-over-year losses are approaching 40%.

Not surprisingly, the Street is stacked against Transocean LTD. Nineteen of 22 covering analysts rate the shares either a "hold" or a "strong sell." Along similar lines, over 27% of the stock's float is sold short, which would take seven sessions to cover, at RIG's typical trading volume.

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