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Why Is Murphy USA (MUSA) Up 8.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Murphy USA (MUSA). Shares have added about 8.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Murphy USA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Murphy USA’s Q1 Earnings Miss Estimate

Murphy USA announced first-quarter 2024 earnings per share of $3.13, which missed the Zacks Consensus Estimate of $4.09 and came in below the year-ago profit of $4.80. The underperformance primarily reflects lower fuel margins and weak petroleum product sales.

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Meanwhile, Murphy USA’s operating revenues of $4.8 billion fell 4.6% year over year and missed the consensus mark by $25 million.

Revenues from petroleum product sales came in at $3.8 billion, below our estimate of $3.9 billion and down 4.6% from the first quarter of 2023. On the other hand, merchandise sales, at $1 billion, rose 3.6% year over year and came ahead of our estimate of $895.6 million.

Key Takeaways

MUSA’s total fuel contribution fell 13.3% year over year to $286.1 million due to margin contraction. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 24.8 cents per gallon, 14.2% lower than the first quarter of 2023.

Retail fuel contribution decreased 5.6% year over year to $250 million as margins narrowed to 21.7 cents per gallon from 23.2 cents in the corresponding period of 2023. Retail gallons edged up 1% from the year-ago period to 1,153.1 million in the quarter under review but just missed our estimate of 1,155.8 million. Volumes on an SSS basis (or fuel gallons per store) declined 0.2% from the first quarter of 2023 to 227.3 thousand.

Contribution from Merchandise increased 2.4% to $191.6 million on higher sales that offset a drop in unit margins from 19.4% a year ago to 19.2% in the first quarter of 2024. On an SSS basis, total merchandise contribution was up 2.2% year over year, primarily on the back of 6.2% higher tobacco margins. Meanwhile, merchandise sales increased 3.2% on an SSS basis, again due to an increase in tobacco sales.

The company’s monthly fuel gallons were essentially unchanged from the prior-year period, though merchandise sales increased 3.1% on an average per store monthly

Balance Sheet

As of Mar 31, Murphy USA — which opened three new retail locations in the quarter to take its store count to 1,733 — had cash and cash equivalents of $56.7 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 69.5%.

During the quarter, MUSA bought back shares worth $86.9 million.






How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Murphy USA has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Murphy USA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Murphy USA belongs to the Zacks Oil and Gas - Refining and Marketing industry. Another stock from the same industry, Equinor (EQNR), has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Equinor reported revenues of $25.14 billion in the last reported quarter, representing a year-over-year change of -14%. EPS of $0.96 for the same period compares with $1.13 a year ago.

Equinor is expected to post earnings of $0.85 per share for the current quarter, representing a year-over-year change of +14.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -9.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Equinor. Also, the stock has a VGM Score of A.

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