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Murphy USA and Capri have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – April 5, 2024 – Zacks Equity Research shares Murphy USA (MUSA - Free Report) as the Bull of the Day and Capri Holdings (CPRI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and Occidental Petroleum Corp. (OXY - Free Report) .
Murphy USA is a retail gasoline station chain headquartered in El Dorado, Arkansas, United States. The company operates primarily in the United States, with a focus on the Southern and Midwestern regions. Murphy USA was established in 1996 as a subsidiary of Murphy Oil Corporation but became an independent entity in 2013.
Murphy USA is known for its strategic partnerships with large retailers like Walmart. Many of its gasoline stations are located adjacent to Walmart stores, which increases foot traffic and enhances convenience for customers. This partnership model has been a significant driver of Murphy USA's growth and success.
In addition to selling gasoline, Murphy USA stations offer convenience store items, snacks, beverages, and other merchandise. Their convenience stores often feature well-known brands and offer a range of products to cater to various customer needs.
Murphy USA has been one of the premier energy stocks over the last decade, compounding at an annual rate of 26.3% and is set to continue to build its impressive business record. The stock currently boasts a Zacks Rank #1 (Strong Buy) rating, and with crude nearing $90/barrel has further catalysts for profit growth.
Earnings Revision Trend
Analysts have made some hefty revisions to the earnings estimates over the last two months, especially if you are looking farther out. FY24 earnings estimates have increased by 6.6% and FY25 have climbed by 17.5%.
MUSA is also one of the few energy companies forecasting YoY growth in both earnings and sales. Because as a retailer, Murphy USA is less sensitive to the gyrations of the commodity market they enjoy steady growth. Whereas other oil companies have seen declines since the price of oil peaked back in 2022.
Share Cannibal
Another good reason to own Murphy USA is that management is a massive buyer of its own stock. Shares outstanding have halved in the last 10 years, making shares scarce and putting a bid constantly beneath the stock.
Valuation
Murphy USA stock is trading right in the center of its long-term average valuation, currently at 16x forward earnings. This is well below the market average and in line with its 10-year median of 16.3x.
Bottom Line
Over the last decade, Murphy USA has been an extremely well positioned business and exceptional performing stock. It has many of the things a long-term investor looks for in a good business, and has the near-term catalyst of rising earnings estimates.
The apparel business is one that is wrought with difficulties. Not only are the companies required to constantly adjust to the fickle consumers’ clothing preferences, but they are also have to efficiently manage the inventories of these shifting options.
Capri Holdings, formerly known as Michael Kors Holdings Limited, is a multinational fashion luxury group known for its portfolio of apparel brands, which include Michael Kors, Versace, and Jimmy Choo.
Capri Holdings has not been a very good stock to own over the last 10 years, halving over that period and significantly underperforming the market. It should be noted that the Retail Apparel subindustry has performed terribly as well over the same period, demonstrating the challenges involved in the business.
Further compounding the poor sentiment is Capri’s falling sales, earnings and earnings revision trend, which has been falling since the beginning of last year and continues to decline.
Earnings Revision Trend
Reflecting its falling earnings estimates, Capri Holdings has a Zacks Rank #5 (Strong Sell) rating, which doesn’t bode well for the stock. Current quarter earnings estimates have been downgraded by -27.3% over the last month and are projected to fall-26% YoY. FY24 earnings estimates have declined by -20.3% and are forecast to fall -38% YoY.
Valuation
As of today, Capri Holdings is trading at a one year forward earnings multiple of 11.9x, which is below the market average, but not exactly cheap for a company with cratering sales and earnings. Additionally, its 10-year median valuation is 10.4x while sales are expected to fall -6.7% this year.
Bottom Line
Because Capri Holdings owns some prestigious brands there is a possibility for it to turn the business and stock around, however as of now the stock should be avoided. Until we begin to see a material pickup in sales growth or the earnings revisions trend, I think investors should look for opportunities elsewhere.
Additional content:
3 Stocks to Benefit from U.S. Clean Energy Transition
The world is undergoing a significant shift toward cleaner energy sources, driven by the need to address climate change and reduce greenhouse gas emissions. Energy companies are at the crossroads, balancing the transition to renewable energies while still harnessing traditional hydrocarbons to fulfill the growing global energy demand.
For oil and gas companies, transitioning to clean energy is crucial beyond mere regulatory compliance or corporate social responsibility. It is a necessity to maintain resilience and relevance in an evolving low-carbon economy. The past two years have shown that the oil and gas sector can play a pivotal role in shaping the new energy landscape, combining investment in low-carbon technologies and maintaining hydrocarbon production.
Can the Winning Streak Continue in 2024?
As we have entered 2024, the question arises — can the momentum in the transition to cleaner energy be sustained? In the United States, there is a clear trend toward reducing the reliance on coal, with projections from the U.S. Energy Information Administration indicating a decrease from 17% of the country’s energy generation in 2023 to 15% in 2024 and 14% in 2025.
Meanwhile, natural gas and renewables are becoming increasingly dominant in the energy mix. In 2023, natural gas accounted for 42% of the U.S. energy generation, with renewables at 22%. This is expected to shift, with renewables increasing to 24% in 2024 and 25% in 2025, largely driven by significant growth in the solar sector. Solar energy, in particular, is poised to lead growth in electricity generation, reflecting its rising importance in the transition to cleaner energy sources.
3 Stocks to Consider
As of 2024, numerous oil and gas companies have taken the lead in embracing clean energy initiatives, making substantial contributions to sustainability goals and the transition toward clean energy.
Exxon Mobil Corp.: The company is focusing on carbon capture and storage (CCS) as a cornerstone of its strategy, along with investments in hydrogen, biofuels and other low-carbon technologies. The company aims to achieve net-zero greenhouse gas emissions from its operated assets by 2050.
XOM has reduced its operated greenhouse gas emissions (GHG) intensity by more than 10% since 2016. It plans to further decrease methane emissions and flaring intensity by 70-80% and 60-70%, respectively, by 2030.
ExxonMobil intends to invest more than $15 billion in lower greenhouse gas emissions initiatives over the next six years. It has also launched a Low Carbon Solutions business to commercialize its CCS technology and has numerous CCS projects worldwide, aiming to capture 20 million metric tons of carbon per year by 2030.
Chevron Corp.: The company’s strategy involves investing in traditional oil and gas businesses to lower their carbon intensity and expanding into low-carbon businesses, including renewable fuels, carbon capture and hydrogen technologies. By 2028, Chevron plans to invest $8 billion in low-carbon investments and $2 billion in carbon-reduction projects.
CVX has already made significant progress in its energy transition efforts. For example, the company’s operations in the deepwater U.S. Gulf of Mexico are among the world’s lowest-carbon-intensity oil and gas producers, and its methane intensity performance in the Permian Basin was in the top quartile of oil and gas producers in 2021.
The company is also advancing carbon capture, utilization, and storage (CCUS) technologies through projects like the Texas Bayou Bend project, which is positioned to be one of the largest carbon storage projects in the United States. By 2030, Chevron targets to expand its renewable fuels production capacity to 100 million barrels per day.
Furthermore, Chevron’s planned completion of the expansion of the Geismar biorefinery in 2024 is expected to increase its overall renewable fuel capacity by 30%.
Occidental Petroleum Corp.: The company has an ambitious clean energy plan focusing on achieving net-zero GHG emissions. The company aims to reach net-zero emissions for its operations and energy use (Scope 1 and 2) before 2040, with a more ambitious target set before 2035. Additionally, it seeks to achieve net zero for its total emissions inventory, including product use (Scope 1, 2 and 3), aiming for this goal before 2050.
Occidental has already made notable progress in its energy transition efforts. The company was the first U.S. oil and gas producer to establish net-zero emissions goals for its operations and products, aligned with the Paris Agreement. It has significantly reduced methane emissions and completed zero routine flaring across its U.S. oil and gas operations.
Occidental is leading in carbon management, progressing on the construction of the STRATOS DAC facility, the first commercial-scale DAC plant in the Permian Basin. Occidental’s strategic investments in net-zero or low-carbon technologies, including in companies like Carbon Engineering and NET Power, highlight its commitment to fostering innovation in carbon management and supporting the transition to a low-carbon economy.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Murphy USA and Capri have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 5, 2024 – Zacks Equity Research shares Murphy USA (MUSA - Free Report) as the Bull of the Day and Capri Holdings (CPRI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Exxon Mobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) and Occidental Petroleum Corp. (OXY - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Murphy USA is a retail gasoline station chain headquartered in El Dorado, Arkansas, United States. The company operates primarily in the United States, with a focus on the Southern and Midwestern regions. Murphy USA was established in 1996 as a subsidiary of Murphy Oil Corporation but became an independent entity in 2013.
Murphy USA is known for its strategic partnerships with large retailers like Walmart. Many of its gasoline stations are located adjacent to Walmart stores, which increases foot traffic and enhances convenience for customers. This partnership model has been a significant driver of Murphy USA's growth and success.
In addition to selling gasoline, Murphy USA stations offer convenience store items, snacks, beverages, and other merchandise. Their convenience stores often feature well-known brands and offer a range of products to cater to various customer needs.
Murphy USA has been one of the premier energy stocks over the last decade, compounding at an annual rate of 26.3% and is set to continue to build its impressive business record. The stock currently boasts a Zacks Rank #1 (Strong Buy) rating, and with crude nearing $90/barrel has further catalysts for profit growth.
Earnings Revision Trend
Analysts have made some hefty revisions to the earnings estimates over the last two months, especially if you are looking farther out. FY24 earnings estimates have increased by 6.6% and FY25 have climbed by 17.5%.
MUSA is also one of the few energy companies forecasting YoY growth in both earnings and sales. Because as a retailer, Murphy USA is less sensitive to the gyrations of the commodity market they enjoy steady growth. Whereas other oil companies have seen declines since the price of oil peaked back in 2022.
Share Cannibal
Another good reason to own Murphy USA is that management is a massive buyer of its own stock. Shares outstanding have halved in the last 10 years, making shares scarce and putting a bid constantly beneath the stock.
Valuation
Murphy USA stock is trading right in the center of its long-term average valuation, currently at 16x forward earnings. This is well below the market average and in line with its 10-year median of 16.3x.
Bottom Line
Over the last decade, Murphy USA has been an extremely well positioned business and exceptional performing stock. It has many of the things a long-term investor looks for in a good business, and has the near-term catalyst of rising earnings estimates.
Bear of the Day:
The apparel business is one that is wrought with difficulties. Not only are the companies required to constantly adjust to the fickle consumers’ clothing preferences, but they are also have to efficiently manage the inventories of these shifting options.
Capri Holdings, formerly known as Michael Kors Holdings Limited, is a multinational fashion luxury group known for its portfolio of apparel brands, which include Michael Kors, Versace, and Jimmy Choo.
Capri Holdings has not been a very good stock to own over the last 10 years, halving over that period and significantly underperforming the market. It should be noted that the Retail Apparel subindustry has performed terribly as well over the same period, demonstrating the challenges involved in the business.
Further compounding the poor sentiment is Capri’s falling sales, earnings and earnings revision trend, which has been falling since the beginning of last year and continues to decline.
Earnings Revision Trend
Reflecting its falling earnings estimates, Capri Holdings has a Zacks Rank #5 (Strong Sell) rating, which doesn’t bode well for the stock. Current quarter earnings estimates have been downgraded by -27.3% over the last month and are projected to fall-26% YoY. FY24 earnings estimates have declined by -20.3% and are forecast to fall -38% YoY.
Valuation
As of today, Capri Holdings is trading at a one year forward earnings multiple of 11.9x, which is below the market average, but not exactly cheap for a company with cratering sales and earnings. Additionally, its 10-year median valuation is 10.4x while sales are expected to fall -6.7% this year.
Bottom Line
Because Capri Holdings owns some prestigious brands there is a possibility for it to turn the business and stock around, however as of now the stock should be avoided. Until we begin to see a material pickup in sales growth or the earnings revisions trend, I think investors should look for opportunities elsewhere.
Additional content:
3 Stocks to Benefit from U.S. Clean Energy Transition
The world is undergoing a significant shift toward cleaner energy sources, driven by the need to address climate change and reduce greenhouse gas emissions. Energy companies are at the crossroads, balancing the transition to renewable energies while still harnessing traditional hydrocarbons to fulfill the growing global energy demand.
For oil and gas companies, transitioning to clean energy is crucial beyond mere regulatory compliance or corporate social responsibility. It is a necessity to maintain resilience and relevance in an evolving low-carbon economy. The past two years have shown that the oil and gas sector can play a pivotal role in shaping the new energy landscape, combining investment in low-carbon technologies and maintaining hydrocarbon production.
Can the Winning Streak Continue in 2024?
As we have entered 2024, the question arises — can the momentum in the transition to cleaner energy be sustained? In the United States, there is a clear trend toward reducing the reliance on coal, with projections from the U.S. Energy Information Administration indicating a decrease from 17% of the country’s energy generation in 2023 to 15% in 2024 and 14% in 2025.
Meanwhile, natural gas and renewables are becoming increasingly dominant in the energy mix. In 2023, natural gas accounted for 42% of the U.S. energy generation, with renewables at 22%. This is expected to shift, with renewables increasing to 24% in 2024 and 25% in 2025, largely driven by significant growth in the solar sector. Solar energy, in particular, is poised to lead growth in electricity generation, reflecting its rising importance in the transition to cleaner energy sources.
3 Stocks to Consider
As of 2024, numerous oil and gas companies have taken the lead in embracing clean energy initiatives, making substantial contributions to sustainability goals and the transition toward clean energy.
Here, we have discussed three companies, each carrying a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Exxon Mobil Corp.: The company is focusing on carbon capture and storage (CCS) as a cornerstone of its strategy, along with investments in hydrogen, biofuels and other low-carbon technologies. The company aims to achieve net-zero greenhouse gas emissions from its operated assets by 2050.
XOM has reduced its operated greenhouse gas emissions (GHG) intensity by more than 10% since 2016. It plans to further decrease methane emissions and flaring intensity by 70-80% and 60-70%, respectively, by 2030.
ExxonMobil intends to invest more than $15 billion in lower greenhouse gas emissions initiatives over the next six years. It has also launched a Low Carbon Solutions business to commercialize its CCS technology and has numerous CCS projects worldwide, aiming to capture 20 million metric tons of carbon per year by 2030.
Chevron Corp.: The company’s strategy involves investing in traditional oil and gas businesses to lower their carbon intensity and expanding into low-carbon businesses, including renewable fuels, carbon capture and hydrogen technologies. By 2028, Chevron plans to invest $8 billion in low-carbon investments and $2 billion in carbon-reduction projects.
CVX has already made significant progress in its energy transition efforts. For example, the company’s operations in the deepwater U.S. Gulf of Mexico are among the world’s lowest-carbon-intensity oil and gas producers, and its methane intensity performance in the Permian Basin was in the top quartile of oil and gas producers in 2021.
The company is also advancing carbon capture, utilization, and storage (CCUS) technologies through projects like the Texas Bayou Bend project, which is positioned to be one of the largest carbon storage projects in the United States. By 2030, Chevron targets to expand its renewable fuels production capacity to 100 million barrels per day.
Furthermore, Chevron’s planned completion of the expansion of the Geismar biorefinery in 2024 is expected to increase its overall renewable fuel capacity by 30%.
Occidental Petroleum Corp.: The company has an ambitious clean energy plan focusing on achieving net-zero GHG emissions. The company aims to reach net-zero emissions for its operations and energy use (Scope 1 and 2) before 2040, with a more ambitious target set before 2035. Additionally, it seeks to achieve net zero for its total emissions inventory, including product use (Scope 1, 2 and 3), aiming for this goal before 2050.
Occidental has already made notable progress in its energy transition efforts. The company was the first U.S. oil and gas producer to establish net-zero emissions goals for its operations and products, aligned with the Paris Agreement. It has significantly reduced methane emissions and completed zero routine flaring across its U.S. oil and gas operations.
Occidental is leading in carbon management, progressing on the construction of the STRATOS DAC facility, the first commercial-scale DAC plant in the Permian Basin. Occidental’s strategic investments in net-zero or low-carbon technologies, including in companies like Carbon Engineering and NET Power, highlight its commitment to fostering innovation in carbon management and supporting the transition to a low-carbon economy.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.