Murphy Inc. Stock Valuation: Is it a Buy in current prices?


According to Zacks Equity Research for Zacks, Murphy USA (MUSA) has been one of the most frequently looked-up stocks recently. In order to understand how the stock might perform in the near future, you might want to consider some of the relevant information.

Compared to the +2.5% change in the Zacks S&P 500 composite, shares of this gas station operator have returned +4.9% over the past month. Murphy USA has increased 0.6% over this time period, along with the Zacks Oil and Gas – Refining and Marketing industry to which it belongs.

Although news items or rumors regarding a significant shift in a company’s business prospects often send its stock “trending” and cause a quick price adjustment, there are always some basic facts that ultimately rule the buy-and-hold decision-making.

Company’s earnings projections

At Zacks, they choose to evaluate the shift in a company’s earnings outlook before all other considerations. This is because, in their opinion, the stock’s fair value is decided by the current value of its projected future earnings stream.

Earnings of $4.67 per share, or a -23.2% drop from the prior year, are projected for the current quarter by Murphy USA. The Zacks Consensus Estimate changed by +27% during the past 30 days.

A drop of -32.8% over the prior year is indicated by the consensus earnings projection of $18.89 for the current fiscal year. For the past 30 days, this estimate has changed by +6.2%.

The consensus earnings estimate of $16.34 for the upcoming fiscal year implies a change of -13.5% from what Murphy USA is anticipated to report a year ago. The estimate has changed by 7.2% over the past month.

Zacks analysts’ recommendation

Their proprietary stock rating methodology, the Zacks Rank, which has a solid externally verified track record, provides a more solid view of a firm’s price direction in the near term since it effectively harnesses the power of earnings estimate revisions. 

Murphy USA is placed at Zacks Rank #1 due to the magnitude of the most recent change in the consensus estimate as well as three other earnings estimate-related variables (Strong Buy).

The following graph displays the development of the company’s consensus forward 12-month EPS estimate:


Revenue growth predictions

While a company’s earnings growth is perhaps the best sign of its financial health, little happens if it cannot boost revenue. As a result, it is critical to understand a company’s potential for revenue growth.

The consensus sales estimate for the current quarter for Murphy USA, which is $5.2 billion, indicates a year-over-year change of +1.6%. Changes of -6.4% and +3.8%, respectively, are indicated by the $21.94 billion and $22.78 billion forecasts for the current and following fiscal years.

Stock valuation                                                                  

As a component of the Zacks Style Scores system, the Zacks Value Style Score classifies stocks into five groups ranging from A to F (A is better than B, B is better than C, and so on), making it useful for determining whether a stock is overvalued, fairly valued, or momentarily undervalued. 

This system evaluates both conventional and unconventional valuation metrics.

According to Zacks’ exclusive data, Murphy USA Inc. is presently ranked as a Zacks Rank 1, and in the next few months, they anticipate an above-average return for the MUSA shares relative to the market. Murphy USA Inc. also has a VGM Score of A. (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style).

Murphy USA Inc. may be undervalued, according to valuation criteria. Given that it has a B value score, value investors should consider it. MUSA’s financial stability and expansion prospects show that it has the potential to outperform the market. The growth score is now a B. 

This stock would not be a prudent option for momentum investors, according to recent price changes and earnings estimate revisions, which give it a Momentum Score of F.


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