Can Murphy USA Pull Off a Strong Show in Q2 Earnings?

Murphy USA MUSA is set to release second-quarter results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $6.90 per share on revenues of $5.6 billion.

Let's delve into the factors that might have influenced the downstream operator's results in the June quarter. But it's worth taking a look at MUSA's previous-quarter performance first.

Highlights of Q1 Earnings & Surprise History

In the last reported quarter, the El Dorado, AR-based motor fuel retailer missed the consensus mark due to lower fuel margins and weak petroleum product sales. MUSA had reported earnings per share of $3.12, well below the Zacks Consensus Estimate of $4.09. Revenues of $4.8 billion generated by the firm also came below the consensus mark by $25 million.

MUSA beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two, resulting in an earnings surprise of 3.1%, on average. This is depicted in the graph below:

Factors to Consider

Our model sees MUSA's total fuel contribution gain 15.5% quarter over quarter to $330.5 million due to margin expansion. Moreover, total fuel contribution (including retail fuel margin plus product supply and wholesale results) is likely to have come in at 26.6 cents per gallon compared to 24.8 cents in the first quarter of 2024.

Murphy USA is also expected to have benefited from sequentially higher petroleum product sales during the quarter. Our model projects the company's second-quarter petroleum product sales at $4.3 billion, up 13.7% from the previous quarter's level of $3.8 billion. Further, our model predicts MUSA to clock merchandise sales of $1.1 billion compared with the first quarter's $1 billion. This increase in sales is likely to have had a positive effect on the second-quarter revenues and cash flows of Murphy USA.

On a further bullish note, the rise in MUSA's retail fuel gallons might have supported the company's to-be-reported bottom line. Going by our model, the company's second-quarter retail fuel volume is likely to have totaled 1,241.8 million gallons, gaining around 90 million gallons from the January-March period. Our model also projects volumes on a same-store sales basis (or fuel gallons per store) to have gained around 6% from the first quarter of 2024 to 241 thousand.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Murphy USA this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

MUSA has an Earnings ESP of +0.10% and a Zacks Rank #3.

Other Stocks to Consider

Murphy USA is not the only company looking up this earnings cycle. Here are some other firms that you may want to consider on the basis of our model:

Enterprise Products Partners L.P. EPD has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.

The 2024 Zacks Consensus Estimate for Enterprise Products Partners indicates 7.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of 1%, on average. Valued at around $65.1 billion, EPD has gone up 10.5% in a year.

Northern Oil and Gas NOG has an Earnings ESP of +1.93% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.

Over the past 30 days, the Zacks Consensus Estimate for Northern Oil and Gas' 2024 earnings has moved up 2.1%. It has a trailing four-quarter earnings surprise of 4.5%, on average. Valued at around $4.1 billion, NOG has inched up 1.9% in a year.

Transocean Ltd. RIG has an Earnings ESP of +20.67% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 31.

Transocean's expected EPS growth rate for three to five years is currently 32.6%, which compares favorably with the industry's growth rate of 17.6%. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $5.1 billion, RIG has lost 35.3% in a year.

To read this article on Zacks.com click here.