MUSA - Murphy USA: Encouraging Trends Despite Q1 Timing Headwinds

2024-05-08 18:25:44 ET

Summary

• Murphy USA shares have performed well, rising 44% in the past year due to strong convenience store sales and favorable capital allocation policies.
• Q1 earnings missed expectations due to weakness in fuel margins, but management expects margin recapture in Q2 and Q3.
• The company's convenience store business offsets declines in the gas business, with stable merchandise sales and gains in tobacco revenue.

Shares of Murphy USA Inc. ( MUSA ) have been a strong performer over the past year, rising 44% thanks to resilient convenience store sales and strong capital allocation policies. I last covered Murphy USA in November , rating shares a buy. Since then, they returned 12%, consistent with my ~$400 target price. While this return has met my expectations, the market has rallied an even more impressive 21%. Given new results, now is a good time to revisit the stock. I remain bullish....

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