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Why Is Murphy Oil (MUR) Down 1.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Murphy Oil (MUR - Free Report) . Shares have lost about 1.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Murphy Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Murphy Oil Q3 Earnings Miss Estimates, Revenues Beat

Murphy Oil delivered third-quarter 2018 earnings of 35 cents per share, missing the Zacks Consensus Estimate of 36 cents by 2.8%. Nevertheless, the figure improved from the year-ago quarter’s loss of 3 cents.

On a GAAP basis, net income per share was 54 cents against a loss of 38 cents in the prior-year quarter.

Revenues

In the quarter under review, Murphy Oil’s revenues totaled $674.8 million, surpassing the Zacks Consensus Estimate of $641 million by 5.3%. The top line increased 35.4% on a year-over-year basis.

Operational Highlights

The company produced 169,000 barrels of oil equivalent per day (boe/d) in the third quarter. The production exceeded the guidance of 166,500 to 168,500 boe/d, courtesy of outperformance in the Tupper Montney onshore Canada and in Sarawak natural gas in Malaysia as well as higher than forecasted volumes.

Murphy Oil sold 15,336.8 Mboe/d, up 6.5% from 14,879.2 Mboe/d in the year-ago quarter.

Murphy Oil’s total costs and expenses were $464 million, up 0.8% from $460.2 million in the year-ago quarter.

Operating income from continuing operations came in at $210.7 million, higher than $38.1 million in the prior-year quarter.  

The company incurred interest charges of $44.5 million, down from $48.6 million in the prior-year quarter.

Financial Condition

Murphy Oil had cash and cash equivalents of $947.7 million as of Sep 30, 2018, compared with $997.2 million as of Dec 31, 2017.

Net cash provided by continuing operations activities at the end of third quarter of 2018 was $372.4 million, higher than $227.3 million at the end of the third quarter of 2017.

Guidance

Murphy Oil expects net production for fourth-quarter 2018 in the range of 167,000-169,000 boe/d. For 2018, production is estimated in the band of 168,500 to 170,500 boe/d. The company expects 2018 capital expenditure budget at $1.18 billion.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -30.8% due to these changes.

VGM Scores

At this time, Murphy Oil has a strong 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 B on the value side, putting it in the second 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Murphy Oil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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