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As Murphy USA Inc. (NYSE:MUSA) released its latest earnings announcement on 30 June 2019, analyst consensus outlook seem bearish, with profits predicted to drop by 16% next year relative to the past 5-year average growth rate of 4.0%. With trailing-twelve-month net income at current levels of US$214m, the consensus growth rate suggests that earnings will decline to US$179m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Murphy USA
How will Murphy USA perform in the near future?
Over the next three years, it seems the consensus view of the 6 analysts covering MUSA is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, MUSA's earnings should reach US$219m, from current levels of US$214m, resulting in an annual growth rate of 7.0%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $5.64 in the final year of forecast compared to the current $6.54 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 1.7% to 1.2% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Murphy USA, there are three pertinent aspects you should look at:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is Murphy USA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Murphy USA is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Murphy USA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.