Is Marathon Selling Speedway? [Expert Guide!]

Marathon has had a very good year so far, posting their best sales ever and hitting a 12-month high in share price. But is this the sign of a genuine long-term trend, or are we simply misreading the tea leaves? Let’s take a closer look at the facts behind the company’s recent success.

Product Knowledge

The global endurance sports market is growing, and so too is the market share of Marathon – from 3% to 4% in 2016, up from 1.8% in 2015, according to research firm Ovum. This is good news for shareholders, because it shows that the product knowledge of the company’s sales force is paying off. Few other companies can boast this level of industry penetration, which makes it all the more pleasing when looking at the numbers.

Ovum’s data also shows that the majority of respondents cited brand awareness and product knowledge as the primary differentiators between the leading companies in the industry. This area of focus clearly defines the actions required of a successful brand in this space – it starts with having a clear understanding of what the sport is, and then builds from there.

A Focus On The Longer Term

The good news for Marathon is that they appear to be shifting focus, away from the shorter-term trends that the stock market tends to favor, and looking instead towards the longer term. This was clear from the way that the management team responded to questions from analysts at an event this past summer.

Respondents on the Street generally agreed, with 76% of respondents believing that Marathon’s management expected earnings growth over the longer term.

With a market capitalization of roughly $2.5 billion, Marathon has the resources to pursue a longer-term strategy, and perhaps this is what we are seeing play out. As the company continues to expand, it will need to establish a significant presence in key international markets, like China, where it is currently missing out on a significant presence despite its international operations.

Sales Growth

Marathon’s biggest challenge will be to ensure that this growth in customer base continues to support earnings growth. To that end, the company has been doing a lot to increase sales, from reducing the amount of time that it takes to close a sale to using predictive analytics to identify new product opportunities. With sales rising by double digits each year, and earnings increasing at a much faster pace as a result, this has certainly helped boost the company’s share price in the process.

Margin Of Safety

So, is Marathon truly a good long-term investment, or are we simply buying shares in a company because the market is pricing it as such? Putting safety first and foremost, it is always better to be over-protective than under. Looking at historical price data and the current market environment, we certainly can’t rule out the possibility of further share price appreciation in the coming months.

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