It has been about a month since the last earnings report for Murphy USA (MUSA Quick QuoteMUSA - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Murphy USA due for a breakout? 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’s Q3 Earnings and Revenues Top Estimates

Murphy USA announced third-quarter 2022 earnings per share of $9.28, which handily beat the Zacks Consensus Estimate of $7.82 and improved significantly from the year-earlier bottom line of $3.98. The outperformance could be attributed to a rise in the retail gasoline price and a higher retail margin of 37.6 cents per gallon, up 41.4% year over year.

In more good news for investors, MUSA’s board of directors recently declared a quarterly cash dividend of 35 cents per share to its common shareholders of record on Nov 8. The payout, which represents a 9% sequential increase, will be made on Dec 1.

Meanwhile, Murphy USA’s operating revenues of $6.2 billion rose 34.7% year over year and beat the consensus mark by $230 million, primarily due to improved merchandise sales.

Merchandise sales, at $1 billion, rose 7.7% year over year and outperformed the consensus mark of $983 million. However, revenues from petroleum product sales came in at $5.1 billion, falling 3.7% short of the Zacks Consensus Estimate but up 42.1% from the third quarter of 2021.

Key Takeaways

MUSA’s total fuel contribution rose 59.8% year over year to $468.1 million due to margin expansion and higher volumes. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 37.6 cents per gallon, which improved more than 41% from the third quarter of 2021.

Retail fuel contribution increased 85.1% year over year to $489.5 million as margins widened to 39.3 cents per gallon from 24 cents in the corresponding period of 2021. Retail gallons rose 13.2% from the year-ago period to 1,245.6 million in the quarter under review and beat the Zacks Consensus Estimate by 3.7%. Volumes on an SSS basis (or fuel gallons per store) improved 10.6% from the third quarter of 2021 to 251.8 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.67 per gallon, up from $2.89 per gallon a year ago.

Contribution from Merchandise increased 9.8% to $205.7 million on higher sales and better unit margins, which, at 20%, moved up from the year-ago period’s 19.6%. On an SSS basis, total merchandise contribution was up 7.5% year over year, primarily on the back of 8.9% higher non-tobacco margins. Meanwhile, merchandise sales increased 5.4% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.

The company’s fuel gallons were up 10.7% from the prior-year period, while merchandise sales increased 5.4% on an average per store month basis.

Balance Sheet

As of Sep 30, Murphy USA — which opened 7 new retail locations in the quarter to take its store count to 1,700 — had cash and cash equivalents of $192.7 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 70.1%.

During the quarter, MUSA bought back shares worth $211.5 million.



 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Murphy USA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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

Murphy USA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Murphy USA is part of the Zacks Oil and Gas - Refining and Marketing industry. Over the past month, Valero Energy (VLO Quick QuoteVLO - Free Report) , a stock from the same industry, has gained 8.5%. The company reported its results for the quarter ended September 2022 more than a month ago.

Valero Energy reported revenues of $44.45 billion in the last reported quarter, representing a year-over-year change of +50.6%. EPS of $7.14 for the same period compares with $1.22 a year ago.

For the current quarter, Valero Energy is expected to post earnings of $7.53 per share, indicating a change of +204.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +14.3% over the last 30 days.

Valero Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.