Back to top

Image: Bigstock

Why Is Murphy USA (MUSA) Down 1.5% Since Last Earnings Report?

Read MoreHide Full Article

It has been about a month since the last earnings report for Murphy USA (MUSA - Free Report) . Shares have lost about 1.5% 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 drivers.

Murphy USA’s Q1 Earnings Beat Estimate

Murphy USA announced first-quarter 2023 earnings per share of $4.80, which beat the Zacks Consensus Estimate of $4.06. The outperformance could be attributed to higher volumes and retail fuel contribution.

However, MUSA’s bottom line was significantly below the year-earlier quarter’s adjusted profit of $6.08 per share, dragged down by a fall in the retail gasoline price.

Meanwhile, Murphy USA’s operating revenues of $5.1 billion edged down 0.8% year over year but breezed past the consensus mark by $118 million, primarily due to improved merchandise sales.

Merchandise sales, at $966.2 million, rose 8.3% year over year and outperformed the consensus mark of $887 million. However, revenues from petroleum product sales came in at $4 billion, falling 3.4% short of the Zacks Consensus Estimate and declining 3.7% from the first quarter of 2022.

Key Takeaways

MUSA’s total fuel contribution fell 10.8% year over year to $329.9 million due to margin contraction. On a bearish note, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 28.9 cents per gallon, which dropped 15% from the first quarter of 2022.

Retail fuel contribution increased 4.4% year over year to $264.7 million even as margins, at 23.2 cents per gallon, remained essentially unchanged from the corresponding period of 2022. Retail gallons rose 4.9% from the year-ago period to 1,141.8 million in the quarter under review but missed the Zacks Consensus Estimate of 1,147 million. Volumes on an SSS basis (or fuel gallons per store) improved 2.2% from the first quarter of 2022 to 227.8 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.15 per gallon, down from $3.43 per gallon a year ago.

Contribution from Merchandise increased 6.5% to $187.1 million on higher sales, which more than offset the fall in unit margins, from 19.7% a year ago to 19.4% in the first quarter of 2023. On an SSS basis, total merchandise contribution was up 5% year over year, primarily on the back of 5.6% higher non-tobacco margins. Meanwhile, merchandise sales increased 6% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.

The company’s monthly fuel gallons were up 2.4% from the prior-year period, while merchandise sales increased 6% on an average per store month basis.

Balance Sheet

As of Dec 31, Murphy USA — which opened eight new retail locations in the quarter to take its store count to 1,720 — had cash and cash equivalents of $102.1 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 71.4%.

During the quarter, MUSA bought back shares worth $13.7 million.





 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 10.18% 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. 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

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 #2 (Buy). We expect an above average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Murphy USA Inc. (MUSA) - free report >>

Published in