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Murphy USA (MUSA) Up 1.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Murphy USA (MUSA - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Murphy USA Q2 Earnings Beat Estimates, Revenues Miss Mark
Murphy USA reported second-quarter 2020 earnings per share of $5.73, beating the Zacks Consensus Estimate of $4.84 and significantly higher than the year-earlier quarter’s bottom line of $1.01.
The outperformance could be attributed to strong retail margin of 31.7 cents per gallon, which soared 136.6% year over year and also breezed past the Zacks Consensus Estimate of 22.5 cents.
However, Murphy USA’s operating revenues of $2.4 billion fell 37.4% year over year and missed the Zacks Consensus Estimate by $190 million due to lower petroleum product sales.
Revenues from petroleum product sales came in at $1.6 billion, down 49.2% from the second quarter of 2019. However, merchandise sales, at $767.1 million rose 16.4% year over year.
Key Takeaways
The company’s total fuel contribution surged 93.6% year over year to $324.6 million, primarily on the back of margin expansion. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 38.3 cents per gallon, improving from 14.7 cents per gallon in the second quarter of 2019.
Retail fuel contribution was up 76.4% year over year to $268.8 million driven by soaring margins, which jumped to 31.7 cents per gallon from 13.4 cents in the corresponding period of 2019. Retail gallons fell 25.7% from the year-ago period to $847.2 million in the quarter under review and failed to beat the Zacks Consensus Estimate of $1.1 billion. Volumes on an SSS basis (or, fuel gallons per month) plunged 27.4% from the second quarter of 2019. Meanwhile, average retail gasoline prices during the quarter were $1.71 per gallon, down significantly from $2.48 per gallon a year ago.
Contribution from Merchandise increased 12.2% to $118.4 million on higher sales even as unit margins, at 15.4%, fell from the year-ago period’s 16%. On SSS basis, total merchandise contribution was up 12.2% year over year in the quarter under review on the back of higher tobacco margins that increased 19.2%. Meanwhile, merchandise sales rose 14.4% on SSS basis.
Fuel gallons were down 26.7% from the prior-year period while merchandise sales increased 14.8% on average per store month (or APSM) basis.
Balance Sheet
As of Jun 30, Murphy USA — which opened 3 new retail location, renovated 8 existing stores and sold 9 sites in the quarter to bring its store count to 1,485 — had cash and cash equivalents of $403.6 million, and long-term debt (including lease obligations) of $975.3 million, with a debt-to-capitalization ratio of 51.5%.
Guidance
The coronavirus outbreak and efforts to stem the contagion’s spread threw up significant challenges to Murphy USA’s business. This prompted the El Dorado, AR-based company to take back its retail fuel volume expectation for this year in April. However, based on the continued recovery in customer traffic over the past few months, the company has reinstated 2020 fuel volume projection to a range of 217.5 to 222.5 thousand gallons on APSM basis, as against 250-255 thousand gallons per the original guidance.
Further, the company’s updated 2020 guidance include 25-27 new stores and 28-30 raze-and-rebuilds, $455-$460 million in merchandise margin contribution (up from $430-$435 million before), and $250-$275 million in capital expenditures (compared to $225-$275 million previously).
Finally, the motor fuel retailer believes that the strong operational performance and solidification of the positive trends observed will allow it to achieve sustainable EBITDA of more than $500 million in 2021, two years earlier than thought.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 70.34% due to these changes.
VGM Scores
Currently, Murphy USA has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Murphy USA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Murphy USA (MUSA) Up 1.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Murphy USA (MUSA - Free Report) . Shares have added about 1.9% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Murphy USA Q2 Earnings Beat Estimates, Revenues Miss Mark
Murphy USA reported second-quarter 2020 earnings per share of $5.73, beating the Zacks Consensus Estimate of $4.84 and significantly higher than the year-earlier quarter’s bottom line of $1.01.
The outperformance could be attributed to strong retail margin of 31.7 cents per gallon, which soared 136.6% year over year and also breezed past the Zacks Consensus Estimate of 22.5 cents.
However, Murphy USA’s operating revenues of $2.4 billion fell 37.4% year over year and missed the Zacks Consensus Estimate by $190 million due to lower petroleum product sales.
Revenues from petroleum product sales came in at $1.6 billion, down 49.2% from the second quarter of 2019. However, merchandise sales, at $767.1 million rose 16.4% year over year.
Key Takeaways
The company’s total fuel contribution surged 93.6% year over year to $324.6 million, primarily on the back of margin expansion. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 38.3 cents per gallon, improving from 14.7 cents per gallon in the second quarter of 2019.
Retail fuel contribution was up 76.4% year over year to $268.8 million driven by soaring margins, which jumped to 31.7 cents per gallon from 13.4 cents in the corresponding period of 2019. Retail gallons fell 25.7% from the year-ago period to $847.2 million in the quarter under review and failed to beat the Zacks Consensus Estimate of $1.1 billion. Volumes on an SSS basis (or, fuel gallons per month) plunged 27.4% from the second quarter of 2019. Meanwhile, average retail gasoline prices during the quarter were $1.71 per gallon, down significantly from $2.48 per gallon a year ago.
Contribution from Merchandise increased 12.2% to $118.4 million on higher sales even as unit margins, at 15.4%, fell from the year-ago period’s 16%. On SSS basis, total merchandise contribution was up 12.2% year over year in the quarter under review on the back of higher tobacco margins that increased 19.2%. Meanwhile, merchandise sales rose 14.4% on SSS basis.
Fuel gallons were down 26.7% from the prior-year period while merchandise sales increased 14.8% on average per store month (or APSM) basis.
Balance Sheet
As of Jun 30, Murphy USA — which opened 3 new retail location, renovated 8 existing stores and sold 9 sites in the quarter to bring its store count to 1,485 — had cash and cash equivalents of $403.6 million, and long-term debt (including lease obligations) of $975.3 million, with a debt-to-capitalization ratio of 51.5%.
Guidance
The coronavirus outbreak and efforts to stem the contagion’s spread threw up significant challenges to Murphy USA’s business. This prompted the El Dorado, AR-based company to take back its retail fuel volume expectation for this year in April. However, based on the continued recovery in customer traffic over the past few months, the company has reinstated 2020 fuel volume projection to a range of 217.5 to 222.5 thousand gallons on APSM basis, as against 250-255 thousand gallons per the original guidance.
Further, the company’s updated 2020 guidance include 25-27 new stores and 28-30 raze-and-rebuilds, $455-$460 million in merchandise margin contribution (up from $430-$435 million before), and $250-$275 million in capital expenditures (compared to $225-$275 million previously).
Finally, the motor fuel retailer believes that the strong operational performance and solidification of the positive trends observed will allow it to achieve sustainable EBITDA of more than $500 million in 2021, two years earlier than thought.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 70.34% due to these changes.
VGM Scores
Currently, Murphy USA has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Murphy USA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.