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Murphy USA (MUSA) Down 0.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Murphy USA (MUSA - Free Report) . Shares have lost about 0.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Murphy USA’s Q2 Earnings Beat Estimate
Murphy USA announced second-quarter 2024 earnings per share of $6.92, which beat the Zacks Consensus Estimate by a penny and came in higher than the year-ago profit of $6.02. The outperformance primarily reflects higher fuel margins.
However, Murphy USA’s operating revenues of $5.4 billion fell 2.4% year over year and missed the consensus mark by $194 million due to tepid petroleum product sales.
Revenues from petroleum product sales came in at $4.3 billion, marginally above our estimate, though down 2.5% from the second quarter of 2023. On the other hand, merchandise sales, at $1.1 billion, rose 3% year over year and came 2.6% ahead of our estimate.
Key Takeaways
MUSA’s total fuel contribution rose 6.7% year over year to $390.3 million due to margin expansion. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 31.7 cents per gallon, 7.5% higher than the second quarter of 2023.
Retail fuel contribution increased 9.1% year over year to $365.2 million as margins widened to 29.7 cents per gallon from 27 cents in the corresponding period of 2023. Retail gallons edged down 0.6% from the year-ago period to 1,231.6 million in the quarter under review and missed our estimate of 1,241.8 million. Volumes on an SSS basis (or fuel gallons per store) declined 0.4% from the second quarter of 2023 to 244.3 thousand.
Contribution from Merchandise increased 4.7% to $216.5 million on higher sales and a rise in unit margins from 19.7% a year ago to 20% in the second quarter of 2024. On an SSS basis, total merchandise contribution was up 5% year over year, primarily on the back of 12.1% higher tobacco margins. Meanwhile, merchandise sales increased 3.1% on an SSS basis, again due to an increase in tobacco sales.
The company’s monthly fuel gallons fell slightly from the prior-year period, though merchandise sales increased 3.3% on an average per store monthly basis.
Balance Sheet
As of Jun 30, Murphy USA — which opened three new retail locations in the quarter to take its store count to 1,736 — had cash and cash equivalents of $79.8 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 68.7%.
During the quarter, MUSA bought back shares worth $107.1 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Murphy USA 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 top 40% 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 USA has a Zacks Rank #3 (Hold). We expect an in-line 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, Equinor (EQNR - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Equinor reported revenues of $25.54 billion in the last reported quarter, representing a year-over-year change of +11.7%. EPS of $0.84 for the same period compares with $0.74 a year ago.
For the current quarter, Equinor is expected to post earnings of $0.75 per share, indicating a change of -18.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Equinor. Also, the stock has a VGM Score of C.
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Murphy USA (MUSA) Down 0.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Murphy USA (MUSA - Free Report) . Shares have lost about 0.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Murphy USA’s Q2 Earnings Beat Estimate
Murphy USA announced second-quarter 2024 earnings per share of $6.92, which beat the Zacks Consensus Estimate by a penny and came in higher than the year-ago profit of $6.02. The outperformance primarily reflects higher fuel margins.
However, Murphy USA’s operating revenues of $5.4 billion fell 2.4% year over year and missed the consensus mark by $194 million due to tepid petroleum product sales.
Revenues from petroleum product sales came in at $4.3 billion, marginally above our estimate, though down 2.5% from the second quarter of 2023. On the other hand, merchandise sales, at $1.1 billion, rose 3% year over year and came 2.6% ahead of our estimate.
Key Takeaways
MUSA’s total fuel contribution rose 6.7% year over year to $390.3 million due to margin expansion. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 31.7 cents per gallon, 7.5% higher than the second quarter of 2023.
Retail fuel contribution increased 9.1% year over year to $365.2 million as margins widened to 29.7 cents per gallon from 27 cents in the corresponding period of 2023. Retail gallons edged down 0.6% from the year-ago period to 1,231.6 million in the quarter under review and missed our estimate of 1,241.8 million. Volumes on an SSS basis (or fuel gallons per store) declined 0.4% from the second quarter of 2023 to 244.3 thousand.
Contribution from Merchandise increased 4.7% to $216.5 million on higher sales and a rise in unit margins from 19.7% a year ago to 20% in the second quarter of 2024. On an SSS basis, total merchandise contribution was up 5% year over year, primarily on the back of 12.1% higher tobacco margins. Meanwhile, merchandise sales increased 3.1% on an SSS basis, again due to an increase in tobacco sales.
The company’s monthly fuel gallons fell slightly from the prior-year period, though merchandise sales increased 3.3% on an average per store monthly basis.
Balance Sheet
As of Jun 30, Murphy USA — which opened three new retail locations in the quarter to take its store count to 1,736 — had cash and cash equivalents of $79.8 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 68.7%.
During the quarter, MUSA bought back shares worth $107.1 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Murphy USA 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 top 40% 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 USA has a Zacks Rank #3 (Hold). We expect an in-line 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, Equinor (EQNR - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Equinor reported revenues of $25.54 billion in the last reported quarter, representing a year-over-year change of +11.7%. EPS of $0.84 for the same period compares with $0.74 a year ago.
For the current quarter, Equinor is expected to post earnings of $0.75 per share, indicating a change of -18.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Equinor. Also, the stock has a VGM Score of C.