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Murphy USA's Bull Run on the Bourse Continues: Let's Explore
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A discreet investment decision entails buying of healthy stocks at the opportune time while getting rid of those that are prone to risk. Price upsurge and strong fundamentals substantiate a stock’s bull run.
Shares of Murphy USA Inc. (MUSA - Free Report) are likely to exhibit an uptrend on the back of a solid second-quarter earnings performance and robust retail margins.
As a matter of fact, if you still haven’t capitalized on this stock’s positives, it’s time that you invest in it for your portfolio boost.
What Makes It a Promising Pick?
An Outperformer
A glance at the company’s price trend shows that the stock had an impressive show on the bourse in the past 12 months. Shares of Murphy USA have surged 51.6% against the 36% decline of its industry.
Top Rank & Attractive VGM Score
This leading independent retailer of motor fuel and convenience merchandise in the United States currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research suggests that stocks with a VGM Score of A or B when combined with a Zacks Rank of 1 or 2 offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Excellent Q2 Performance
Murphy USA reported second-quarter 2020 earnings per share of $5.73, beating the Zacks Consensus Estimate of $4.84 and also, significantly improving from the year-earlier quarter’s bottom line of $1.01. This outperformance could be attributed to a sturdy retail margin of 31.7 cents per gallon, which soared 136.6% year over year and also outpaced the Zacks Consensus Estimate of 22.5 cents.
Northward Estimate Revisions
The direction of estimate revisions serves as a key indicator when it comes to stock movement. The Zacks Consensus Estimate for 2020 earnings has been revised 33% upward over the past 60 days while the same for 2021 has moved 14.55% north.
Positive Earnings Surprise History
Murphy USA has an outstanding surprise record. Its earnings surpassed the Zacks Consensus Estimate in all the preceding four quarters, the average being 24.44%.
Strong Balance Sheet
The company exited the second quarter with cash and cash equivalents of $403.6 million, up 101.5% from the year-ago level.
Key Drivers
Murphy USA’s unique high-volume low-cost business model helps it retain solid profitability despite a fiercely competitive retail environment. The company, which sells more than 4 billion gallons of retail fuel annually, owns above 90% of its gasoline stations. This enables it to contain its operating expenses. The proximity of Murphy USA’s fuel stations to Walmart (WMT - Free Report) supercenters aids the company to gain traction from the consistent footfall that these stores attract, thereby driving its above-average fuel sales volume.
The company’s outsourcing of raw materials is another key catalyst. With access to pipelines and product distribution terminals, Murphy USA is able to avail of fuel at a cheaper cost than most can buy. This, in turn, allows the company to sell retail gasoline at a discount.
Through its shareholder-friendly capital allocations, Murphy USA is committed to return a portion of its free cash flow to its shareholders through continued and ongoing share repurchases. As a proof, the company spent 48% of its capital budget from 2015 to 2019 on stock buybacks.
Notwithstanding Murphy USA’s outstanding June-quarter performance, the coronavirus outbreak and efforts to stop the contagion’s spread are likely to pose significant challenges to the business. As a matter of fact, this uncalled-for situation prompted the El Dorado, AR-based company to suspend its current-year retail fuel volume guidance in April. However, based on the continued recovery in customer traffic over the past few months, the company reiterated 2020 fuel volume projection to a range of 217.5-222.5 thousand gallons on APSM basis.
Further, the company’s updated 2020 outlook includes 25-27 new stores and 28-30 raze-and-rebuilds and $455-$460 million in merchandise margin contribution (up from $430-$435 million before).
Finally, management at this motor fuel retailer believes that the company’s strong operational performance and positive trends will allow the stock to achieve a sustainable EBITDA of more than $500 million in 2021, two years earlier than expected.
Other Key Picks
Some other top-ranked stocks in the energy space are CNOOC Limited (CEO - Free Report) and SilverBow Resources Inc. (SBOW - Free Report) , each carrying the same Zacks Rank as Murphy USA at present.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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Murphy USA's Bull Run on the Bourse Continues: Let's Explore
A discreet investment decision entails buying of healthy stocks at the opportune time while getting rid of those that are prone to risk. Price upsurge and strong fundamentals substantiate a stock’s bull run.
Shares of Murphy USA Inc. (MUSA - Free Report) are likely to exhibit an uptrend on the back of a solid second-quarter earnings performance and robust retail margins.
As a matter of fact, if you still haven’t capitalized on this stock’s positives, it’s time that you invest in it for your portfolio boost.
What Makes It a Promising Pick?
An Outperformer
A glance at the company’s price trend shows that the stock had an impressive show on the bourse in the past 12 months. Shares of Murphy USA have surged 51.6% against the 36% decline of its industry.
Top Rank & Attractive VGM Score
This leading independent retailer of motor fuel and convenience merchandise in the United States currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research suggests that stocks with a VGM Score of A or B when combined with a Zacks Rank of 1 or 2 offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Excellent Q2 Performance
Murphy USA reported second-quarter 2020 earnings per share of $5.73, beating the Zacks Consensus Estimate of $4.84 and also, significantly improving from the year-earlier quarter’s bottom line of $1.01. This outperformance could be attributed to a sturdy retail margin of 31.7 cents per gallon, which soared 136.6% year over year and also outpaced the Zacks Consensus Estimate of 22.5 cents.
Northward Estimate Revisions
The direction of estimate revisions serves as a key indicator when it comes to stock movement. The Zacks Consensus Estimate for 2020 earnings has been revised 33% upward over the past 60 days while the same for 2021 has moved 14.55% north.
Positive Earnings Surprise History
Murphy USA has an outstanding surprise record. Its earnings surpassed the Zacks Consensus Estimate in all the preceding four quarters, the average being 24.44%.
Strong Balance Sheet
The company exited the second quarter with cash and cash equivalents of $403.6 million, up 101.5% from the year-ago level.
Key Drivers
Murphy USA’s unique high-volume low-cost business model helps it retain solid profitability despite a fiercely competitive retail environment. The company, which sells more than 4 billion gallons of retail fuel annually, owns above 90% of its gasoline stations. This enables it to contain its operating expenses. The proximity of Murphy USA’s fuel stations to Walmart (WMT - Free Report) supercenters aids the company to gain traction from the consistent footfall that these stores attract, thereby driving its above-average fuel sales volume.
The company’s outsourcing of raw materials is another key catalyst. With access to pipelines and product distribution terminals, Murphy USA is able to avail of fuel at a cheaper cost than most can buy. This, in turn, allows the company to sell retail gasoline at a discount.
Through its shareholder-friendly capital allocations, Murphy USA is committed to return a portion of its free cash flow to its shareholders through continued and ongoing share repurchases. As a proof, the company spent 48% of its capital budget from 2015 to 2019 on stock buybacks.
Notwithstanding Murphy USA’s outstanding June-quarter performance, the coronavirus outbreak and efforts to stop the contagion’s spread are likely to pose significant challenges to the business. As a matter of fact, this uncalled-for situation prompted the El Dorado, AR-based company to suspend its current-year retail fuel volume guidance in April. However, based on the continued recovery in customer traffic over the past few months, the company reiterated 2020 fuel volume projection to a range of 217.5-222.5 thousand gallons on APSM basis.
Further, the company’s updated 2020 outlook includes 25-27 new stores and 28-30 raze-and-rebuilds and $455-$460 million in merchandise margin contribution (up from $430-$435 million before).
Finally, management at this motor fuel retailer believes that the company’s strong operational performance and positive trends will allow the stock to achieve a sustainable EBITDA of more than $500 million in 2021, two years earlier than expected.
Other Key Picks
Some other top-ranked stocks in the energy space are CNOOC Limited (CEO - Free Report) and SilverBow Resources Inc. (SBOW - Free Report) , each carrying the same Zacks Rank as Murphy USA at present.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>