Murphy USA Stock To $307?

Murphy USA (MUSA) stock has jumped 12% during the past week, and is currently trading at $438.43. Our multi-factor assessment suggests that it may be time to sell MUSA stock. We have, overall, a pessimistic view of the stock, and a price of $307 may not be out of reach. We believe there are several things to fear in MUSA stock given its overall Weak operating performance and financial condition. Hence, despite its Moderate valuation, this makes the stock look Risky.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $8.2 Bil in market cap, Murphy USA provides retail motor fuel products and convenience merchandise through 1,679 stores operating under Murphy USA, Murphy Express, and QuickChek brands.

[1] Valuation Looks Moderate

This table highlights how MUSA is valued vs broader market. For more details see: MUSA Valuation Ratios

[2] Growth Is Very Weak

• Murphy USA has seen its top line shrink at an average rate of -6.1% over the last 3 years
• Its revenues have fallen -4.2% from $20 Bil to $19 Bil in the last 12 months
• Also, its quarterly revenues grew 0.7% to $4.7 Bil in the most recent quarter from $4.7 Bil a year ago.

This table highlights how MUSA is growing vs broader market. For more details see: MUSA Revenue Comparison

[3] Profitability Appears Very Weak

• MUSA last 12 month operating income was $739 Mil representing operating margin of 3.8%
• With cash flow margin of 4.2%, it generated nearly $814 Mil in operating cash flow over this period
• For the same period, MUSA generated nearly $471 Mil in net income, suggesting net margin of about 2.4%

This table highlights how MUSA profitability vs broader market. For more details see: MUSA Operating Income Comparison

[4] Financial Stability Looks Weak

• MUSA Debt was $2.7 Bil at the end of the most recent quarter, while its current Market Cap is $8.2 Bil. This implies Debt-to-Equity Ratio of 33.5%
• MUSA Cash (including cash equivalents) makes up $29 Mil of $4.7 Bil in total Assets. This yields a Cash-to-Assets Ratio of 0.6%

[5] Downturn Resilience Is Strong

MUSA has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• MUSA stock fell 24.7% from a high of $318.67 on 1 November 2022 to $240.06 on 14 March 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 July 2023
• Since then, the stock increased to a high of $555.48 on 26 November 2024 , and currently trades at $438.43

 
2020 Covid Pandemic

• MUSA stock fell 30.4% from a high of $117.00 on 1 January 2020 to $81.49 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 15 July 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read MUSA Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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