Murphy USA (MUSA) Shares Move Up Since Easy Q2 Earnings Beat

The stock of motor fuel retailer Murphy USA Inc. MUSA has gained 9.9% since its second-quarter earnings announcement on Jul 27. The company managed to score comfortable top and bottom-line beats.

What Did Murphy USA’s Earnings Unveil?

Murphy USA announced second-quarter 2022 earnings per share of $7.53, which handily beat the Zacks Consensus Estimate of $5.35 and improved significantly from the year-earlier bottom line of $4.79. The outperformance could be attributed to a rise in the retail gasoline price and a higher retail margin of 34.9 cents per gallon, up 23.8% year over year.

Meanwhile, Murphy USA’s operating revenues of $6.8 billion surged 51.9% year over year and beat the consensus mark by $389 million, primarily due to improved petroleum product sales.

Revenues from petroleum product sales came in at $5.7 billion, up 67.1% from the second quarter of 2021 and 4.9% above the Zacks Consensus Estimate. Merchandise sales, at $994.6 million, rose 3.2% year over year and outperformed the consensus mark of $976 million.

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 33.6% year over year to $422.9 million due to margin expansion and higher volumes. Total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 34.9 cents per gallon, which improved nearly 24% from the second quarter of 2021.

Retail fuel contribution increased 31.1% year over year to $320.8 million as margins widened to 26.5 cents per gallon from 21.8 cents in the corresponding period of 2021. Retail gallons rose 7.8% from the year-ago period to 1,211.3 million in the quarter under review and beat the Zacks Consensus Estimate by 2.4%. Volumes on an SSS basis (or fuel gallons per store) improved 6.3% from the second quarter of 2021 to 247.9 thousand. Meanwhile, the average retail gasoline price during the quarter came in at $4.21 per gallon, surging from $2.73 per gallon a year ago.

Contribution from Merchandise increased 6.6% to $196.7 million on higher sales and better unit margins, which, at 19.8%, moved up from the year-ago period’s 19.2%. On an SSS basis, total merchandise contribution was up 4.1% year over year, primarily on the back of 4.9% higher non-tobacco margins. Meanwhile, merchandise sales edged up 1.5% on an SSS basis due to an increase in tobacco as well as non-tobacco sales.

The Zacks Rank #1 (Strong Buy) company’s fuel gallons were up 5.8% from the prior-year period, while merchandise sales increased 1.5% 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 Jun 30, Murphy USA — which opened 9 new retail locations in the quarter to take its store count to 1,695 — had cash and cash equivalents of $240.4 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 70.2%.

During the quarter, MUSA bought back shares worth $203.6 million.

Some Key Refining Earnings

While we have discussed MUSA’s second-quarter results in detail, let’s see how some other oil refining companies fared this earnings season.

Phillips 66 PSX reported adjusted earnings per share of $6.77, comfortably beating the Zacks Consensus Estimate of $5.92. The bottom line also skyrocketed from a profit of 74 cents per share in the year-ago quarter.

PSX’s worldwide margins surged to $28.31 per barrel from the year-ago quarter’s $3.92. The same in the Central Corridor and Atlantic Basin/Europe increased to $26.72 and $30.39 per barrel from the year-ago levels of $6.40 and $4.63, respectively. In the Gulf Coast, Phillips 66 saw the metric jump to $24.80 per barrel from $2.10 in the prior-year quarter. The West Coast witnessed an increase in margins from $3.37 per barrel in the year-ago quarter to $33.13 in the June-end quarter of 2022.

Another refining giant Valero Energy VLO reported adjusted earnings of $11.36 per share, compared to a meager 48 cents in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of $9.70 per share. VLO’s strong quarterly results were supported by increased refinery throughput volumes and a higher refining margin.

For the quarter, Valero’s refining throughput volumes were 2,962 thousand barrels per day (MBbls/d), up from 2,835 MBbls/d in second-quarter 2021. Meanwhile, VLO’s refining margin per barrel of throughput increased to $30.01 from the year-ago level of $7.95.

Finally, we have Marathon Petroleum MPC, which reported second-quarter adjusted earnings of $10.61 per share, comfortably beating the Zacks Consensus Estimate of $9.17 and compared with a profit of merely 67 cents per share in the year-ago period. MPC’s bottom line was favorably impacted by the stronger-than-expected performance of its Refining & Marketing segment, whose operating income totaled $7.1 billion, ahead of its Zacks Consensus Estimate by 108.4%.

The company repurchased shares worth $4.1 billion during the May-July period and has now completed more than 80% of its target to buy back $15 billion in common stock. This was after Marathon Petroleum concluded the sale of its Speedway business, comprising approximately 3,900 c-stores in 35 states to Japan-based retail group Seven &i Holdings — the owner of the 7-Eleven convenience store chain — for $21 billion. With the existing capital return program coming to a close, the MPC board authorized a new $5 billion repurchase scheme with no expiration date.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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