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Murphy Oil (MUR) to Gain on Cost Savings, High-Margin Assets

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Murphy Oil Corporation’s (MUR - Free Report) cost-saving initiatives, low-cost asset development along with steady growth-driving activities in the United States and at international locations are expected to boost its existing businesses.

We recently issued an updated research report on this currently Zacks Rank #3 (Hold) company, which has a trailing four-quarter earnings surprise of 19.43%, on average.

What’s Driving the Stock?

Murphy Oil possesses one of the best upstream portfolios among the domestic oil and natural gas integrated companies and the independent E&P group. The company is regularly pursuing developmental endeavors in the United States and at other global sites. It undertook cost-containment measures, which led to a 40% decline in 2020 G&A expenses from the 2019 baseline.

Over the past several months, the company has been trying to transform its portfolio through strategic moves like acquisitions, divestitures and oil-weighted discoveries. Its focus on developing high-margin liquid assets is evident from its production mix. The company is maintaining a multi-basin portfolio of onshore and offshore assets for additional risk-reduction flexibility amid  fluctuating prices.

Moreover, it has a long history of shareholder value addition, courtesy of its steady cash flows. Since 2012, Murphy Oil has returned $3.9 billion to its shareholders through buybacks and dividend payouts. A consistent operational excellence enabled it to reward its shareholders through routine dividend payouts.

Woes

However, Murphy Oil operates in a highly competitive environment, which might dent its profitability. Also, stringent regulations and unfavorable foreign currency conversion rates are its near-term concerns.

Price Performance

Shares of Murphy Oil have rallied 65.8% in the past three months, outperforming the industry’s 56.3% growth.

Stocks to Consider

A few better-ranked stocks in the same sector are Devon Energy Corporation (DVN - Free Report) , Denbury Inc. and DCP Midstream Partners, LP , all sporting a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Devon Energy delivered an earnings surprise of 66.7%, on average, in the last four quarters. The company has a long-term (three-five years) earnings growth rate of 1.12%

Denbury delivered an earnings surprise of 16.25%, on average, in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has moved 85.3% north in the past 60 days.

DCP Midstream delivered an earnings surprise of 13.57%, on average, in the trailing four quarters. The Zacks Consensus Estimate for 2021 earnings has been revised 21.3% upward in the past 60 days.

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