A month has gone by since the last earnings report for Murphy USA (MUSA Quick QuoteMUSA - Free Report) . Shares have added about 13.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Murphy USA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Murphy USA’s Q3 Earnings Beat Estimate

Murphy USA announced third-quarter 2024 earnings per share of $7.20, which beat the Zacks Consensus Estimate of $6.64. The outperformance primarily reflects higher fuel margins.

However, the company’s bottom line fell from the year-ago adjusted profit of $7.69 due to tepid petroleum product sales.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Murphy USA’s operating revenues of $5.2 billion fell 9.6% year over year and missed the consensus mark by $362 million.

Revenues from petroleum product sales came in at $4.1 billion, well below our estimate of $4.5 billion and down 11.5% from the third quarter of 2023. On the other hand, merchandise sales, at $1.1 billion, rose 2.5% year over year but were $34.7 million below our estimate.

Key Takeaways

MUSA’s total fuel contribution fell 3.5% year over year to $404.2 million, as lower RIN contribution offset margin expansion. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) came in at 32.6 cents per gallon, 5.5% lower than the third quarter of 2023.

Retail fuel contribution increased 13.5% year over year to $395.7 million as margins widened to 31.9 cents per gallon from 28.7 cents in the corresponding period of 2023. Retail gallons edged up 2% from the year-ago period to 1,239.3 million in the quarter under review and beat our estimate of 1,213.8 million. Volumes on an SSS basis (or fuel gallons per store) improved 1.4% from the third quarter of 2023 to 245.2 thousand.

Contribution from Merchandise increased 2.4% to $216.8 million on higher sales, which offset a marginal fall in unit margins from 20.1% a year ago to 20% in the third quarter of 2024. On an SSS basis, total merchandise contribution was up 1.2% year over year, primarily on the back of 6.1% higher nicotine margins. Meanwhile, merchandise sales increased 1.6% on an SSS basis, again due to an increase in nicotine sales.

The company’s monthly fuel gallons rose 1.1% from the prior-year period, while merchandise sales decreased 2% on an average per store monthly basis.

Balance Sheet

As of Sept. 30, Murphy USA — which opened four new retail locations in the quarter to take its store count to 1,740 — had cash and cash equivalents of $52.5 million and long-term debt (including lease obligations) of $1.8 billion, with a debt-to-capitalization of 68.7%.

During the quarter, MUSA bought back shares worth $126.4 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -10.03% due to these changes.

VGM Scores

At this time, Murphy USA has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Murphy USA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.