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Murphy USA (MUSA) Shares Move Up Since Easy Q1 Earnings Beat

·5-min read

The stock of motor fuel retailer Murphy USA Inc. MUSA has gained 6% since its first-quarter earnings announcement on May 3. The company managed to score comfortable top and bottom-line beats.

What Did Murphy USA’s Earnings Unveil?

Murphy USA announced first-quarter 2022 earnings per share of $6.08, which handily beat the Zacks Consensus Estimate of $2.65 and more than tripled from the year-earlier bottom line of $2.01. The outperformance could be attributed to a rise in the retail gasoline price and a higher retail margin of 34 cents per gallon, up 51.1% year over year.

Meanwhile, Murphy USA’s operating revenues of $5.1 billion surged 44.7% year over year and beat the consensus mark by $530 million, primarily due to improved petroleum product sales.

Revenues from petroleum product sales came in at $4.1 billion, up 57.4% from the first quarter of 2021 and 4.6% above the Zacks Consensus Estimate. Merchandise sales, at $892 million, rose 7.1% year over year but underperformed the Zacks Consensus Estimate of $924 million.

Murphy USA Inc. Price, Consensus and EPS Surprise

Murphy USA Inc. Price, Consensus and EPS Surprise
Murphy USA Inc. Price, Consensus and EPS Surprise

Murphy USA Inc. price-consensus-eps-surprise-chart | Murphy USA Inc. Quote

Key Takeaways

MUSA’s total fuel contribution rose 62.7% year over year to $369.8 million due to margin expansion and higher volumes. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 34 cents per gallon, which improved more than 51% from the first quarter of 2021.

Retail fuel contribution increased 61.6% year over year to $253.6 million as margins widened to 23.3 cents per gallon from 15.5 cents in the corresponding period of 2021. Retail gallons rose 7.8% from the year-ago period to 1,088.3 million in the quarter under review and beat the Zacks Consensus Estimate by 4%. Volumes on an SSS basis (or fuel gallons per store) improved 4.7% from the first quarter of 2021 to 222.8 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $3.43 per gallon, surging from $2.37 per gallon a year ago.

Contribution from Merchandise increased 18.4% to $175.7 million on higher sales and better unit margins, which, at 19.7%, moved up from the year-ago period’s 17.8%. On an SSS basis, total merchandise contribution was up 5.6% year over year, primarily on the back of 7.8% higher tobacco margins. Meanwhile, merchandise sales edged up 0.1% on an SSS basis due to an increase of 0.2% in tobacco sales that was effectively offset by a 0.2% loss in non-tobacco sales.

The Zacks Rank #1 (Strong Buy) company’s fuel gallons were up 4.6% from the prior-year period, while merchandise sales increased 2.9% on an average per store month basis.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Balance Sheet

As of Mar 31, Murphy USA — which opened 7 new retail locations in the quarter to take its store count to 1,686 — had cash and cash equivalents of $356.2 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 69.4%.

During the quarter, MUSA bought back shares worth $151.8 million.

Downstream Earnings Snapshot

Apart from MUSA, supportive industry fundamentals and favorable margins have led to a good earnings season for some other refining stocks as well.

Phillips 66 PSX reported adjusted earnings per share of $1.32, comfortably beating the Zacks Consensus Estimate of $1.14. The bottom line also turned around from a loss of $1.16 per share in the year-ago quarter.

PSX’s margins improved to $10.55 per barrel from the year-ago quarter’s $4.36. The same in the Central Corridor and Atlantic Basin/Europe increased to $7.89 and $11.71 per barrel from the year-ago levels of $5.97 and $4.86, respectively. In the Gulf Coast, the metric registered an improvement to $7.71 per barrel from $3.39 in the prior-year quarter. The West Coast witnessed an increase in margins from $3.33 per barrel in the year-ago quarter to $17.68 in the March-end quarter of 2022.

Another downstream giant Valero Energy VLO reported adjusted earnings of $2.31 per share, improving from a loss of $1.73 in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $1.61 per share. VLO’s strong quarterly results were supported by increased refinery throughput volumes and a higher refining margin.

For the quarter, refining throughput volumes were 2,800 thousand barrels per day (MBbls/d), up from 2,410 MBbls/d in first-quarter 2021. Meanwhile, Valero Energy’s refining margin per barrel of throughput increased to $12.74 from the year-ago level of $6.91.

Then there is Marathon Petroleum Corporation MPC, which reported earnings per share of $1.49, comfortably beating the Zacks Consensus Estimate of $1.12 and reversing the year-ago loss of 37 cents per share. The company repurchased shares worth $2.5 billion during the February-April period and has now completed around 80% of its target to buy back $10 billion in common stock

MPC’s refining margin of $15.31 per barrel improved significantly from $10.16 a year ago. Total refined product sales volumes were 3,293 thousand barrels per day (mbpd), up from the 3,067 mbpd in the year-ago quarter. Throughput rose from 2,565 mbpd in the year-ago quarter to 2,833 mbpd. Capacity utilization for Marathon Petroleum during the quarter was up from last year’s 83% to 91%.

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