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Should Value Investors Now Choose Murphy USA (MUSA) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Murphy USA Inc. (MUSA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Murphy USA has a trailing twelve months PE ratio of 13.81, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 17.04. If we focus on the long-term PE trend, Murphy USA’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Moreover, the stock’s PE also compares unfavorably with the Zacks Oils-Energy sector’s trailing twelve months PE ratio, which stands at 9.47. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Murphy USA Partners has a forward PE ratio (price relative to this year’s earnings) of just 14.29, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Murphy USA has a P/S ratio of about 0.24. This is significantly lower than the S&P 500 average, which comes in at 2.95 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, MUSA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Murphy USA currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Murphy USA a solid choice for value investors.
For example, the PEG ratio for Murphy USA is just 2.04, a level that is lower than the industry average of 2.84. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. MUSA is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Murphy USA might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of A. This gives MUSA a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen two upward revisions in the past sixty days compared to one downward revision, while the current year estimate has seen three upward revision compared to one downward revision in the same time period.
As a result, the current quarter consensus estimate has increased 69.8% in the past two months, while the current year estimate improved 34.3 in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Owing to the positive estimate trend, the stock has a Zacks Rank #2 (Buy) on the back of its strong value metrics and this is why we are expecting outperformance from the company in the near-term.
Bottom Line
Murphy USA is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a solid Zacks Rank instills investor confidence.
So, value investors might want to delve deeper in this stock as it appears to be a compelling pick.
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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Should Value Investors Now Choose Murphy USA (MUSA) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Murphy USA Inc. (MUSA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Murphy USA has a trailing twelve months PE ratio of 13.81, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 17.04. If we focus on the long-term PE trend, Murphy USA’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Moreover, the stock’s PE also compares unfavorably with the Zacks Oils-Energy sector’s trailing twelve months PE ratio, which stands at 9.47. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Murphy USA Partners has a forward PE ratio (price relative to this year’s earnings) of just 14.29, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Murphy USA has a P/S ratio of about 0.24. This is significantly lower than the S&P 500 average, which comes in at 2.95 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, MUSA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Murphy USA currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Murphy USA a solid choice for value investors.
For example, the PEG ratio for Murphy USA is just 2.04, a level that is lower than the industry average of 2.84. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. MUSA is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Murphy USA might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of A. This gives MUSA a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen two upward revisions in the past sixty days compared to one downward revision, while the current year estimate has seen three upward revision compared to one downward revision in the same time period.
As a result, the current quarter consensus estimate has increased 69.8% in the past two months, while the current year estimate improved 34.3 in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Murphy USA Inc. Price and Consensus
Murphy USA Inc. price-consensus-chart | Murphy USA Inc. Quote
Owing to the positive estimate trend, the stock has a Zacks Rank #2 (Buy) on the back of its strong value metrics and this is why we are expecting outperformance from the company in the near-term.
Bottom Line
Murphy USA is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a solid Zacks Rank instills investor confidence.
So, value investors might want to delve deeper in this stock as it appears to be a compelling pick.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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