Updated 3/11/25
Murphy USA Inc. (NYSE: MUSA) operates a network of fuel stations, primarily located near Walmart stores, and has built a strong reputation for competitive fuel pricing. Over the years, the company has grown its market presence by focusing on efficiency, cost control, and high-volume fuel sales.
While traditionally viewed as a fuel retailer with a focus on growth, Murphy USA has recently emerged as a dividend-paying stock. Though the yield is relatively low compared to classic dividend players, the company has shown a commitment to increasing its payouts, making it an interesting choice for investors who prioritize both long-term capital appreciation and income potential.
For investors looking at Murphy USA from a dividend perspective, let’s break down the key factors that matter.
Key Dividend Metrics
💰 Dividend Yield: 0.42% (forward), 0.38% (trailing)
📈 5-Year Average Yield: Not yet available
💵 Annual Dividend Payout: $1.96 per share (forward), $1.79 per share (trailing)
🔄 Dividend Growth: Increasing, with potential for further raises
🔒 Payout Ratio: 7.42%, leaving significant room for growth
📅 Ex-Dividend Date: February 24, 2025
💸 Dividend Payment Date: March 5, 2025
Dividend Overview
Murphy USA may not be the first name that comes to mind for dividend investors, but the company has taken meaningful steps toward rewarding shareholders. While the current dividend yield of just over 0.4% isn’t high by traditional standards, the fact that MUSA is returning capital to investors is a positive sign.
What stands out is the extremely low payout ratio of 7.42%. This suggests that the company has ample room to grow its dividend over time. Unlike some high-yield stocks that distribute a large portion of earnings, Murphy USA retains a significant amount of capital to reinvest in the business, which could lead to future dividend increases.
Dividend Growth and Safety
Even though Murphy USA’s dividend history is relatively short, the company has been increasing payouts at a steady pace. That’s a good sign for investors looking for sustainable dividend growth rather than just a high initial yield.
Potential for Dividend Growth
With strong free cash flow of $300.86 million over the past year and a low payout ratio, there’s plenty of flexibility for higher dividends. If Murphy USA chooses to double its payout, it would still remain in a comfortable range. This makes the company’s dividend policy both conservative and capable of long-term expansion.
Dividend Safety
Given the low payout ratio and strong profitability, Murphy USA’s dividend is unlikely to face a cut even in challenging market conditions. Key financial indicators also point to the company’s ability to maintain and grow its distributions:
- Return on Equity: 60.22%, signaling strong earnings efficiency
- Operating Margin: 5.09%, solid for a fuel retailer
- Profit Margin: 2.81%, reflecting consistent profitability
These figures suggest that Murphy USA is well-positioned to keep increasing dividends without jeopardizing its financial health.
Chart Analysis
The price action of Murphy USA Inc. (MUSA) tells an interesting story. The stock has had a strong run over the past year, but recent trends indicate a shift in momentum. There’s a clear battle between buyers and sellers, and the technical indicators provide clues about where things might be heading next.
Moving Averages Show a Change in Trend
The 50-day simple moving average (SMA) has been declining and recently crossed below the 200-day SMA. This is known as a death cross, a bearish signal that suggests short-term momentum has weakened. For most of the past year, the stock traded comfortably above both moving averages, signaling an uptrend. But now, with the price hovering near the 200-day SMA and struggling to regain strength, there’s a shift in sentiment.
Price Action and Support Levels
The stock recently pulled back from its highs near 550 and dropped below 500, finding some support around the 450-460 range. The fact that it’s bouncing around this area suggests buyers are stepping in, but the struggle to push above resistance levels is something to watch. If the price fails to climb back above the moving averages, it could indicate further weakness.
The recent candles show hesitation. There are small-bodied candles with longer wicks, which indicate some buying interest but also a fair amount of selling pressure. This kind of action suggests uncertainty among investors.
Volume Tells the Story of Participation
Volume is always a key factor in technical analysis. Spikes in volume typically signal stronger conviction in a move, whether up or down. Over the past several months, there have been some notable surges in volume, particularly during sell-offs. That tells us that the declines were met with higher participation, which can sometimes indicate a trend shift.
However, recent volume has been relatively low, suggesting that the current price movement lacks strong conviction. A breakout above recent resistance with heavy volume would be a more reliable sign of a reversal to the upside.
Relative Strength Index (RSI) Shows Oversold Conditions Are Easing
The RSI indicator at the bottom of the chart shows that the stock was recently in oversold territory, but it has since started to recover. This suggests that the worst of the selling pressure might be over for now. That being said, RSI alone isn’t enough to confirm a trend reversal. The stock still needs to prove itself by reclaiming key resistance levels.
Final Thoughts on the Last Five Candles
Looking at the last five trading sessions, there are mixed signals. The candles show some buying interest, but none of them have been strong enough to reclaim lost ground. There are wicks on both ends of the candles, which indicate indecision. Some of the most recent sessions had low trading volume, which means there hasn’t been a strong push from either bulls or bears.
The market seems to be waiting for a catalyst to determine the next move. A break above the recent highs with strong volume could indicate that buyers are regaining control, while failure to hold current levels could lead to further downside.
Analyst Ratings
Murphy USA Inc. (MUSA) has recently been the subject of varied analyst opinions, reflecting both optimism and caution. The consensus 12-month price target among analysts stands at approximately $531.25, with forecasts ranging from a high of $590.00 to a low of $431.00.
🔼 Upgrades
📈 Jefferies: On March 11, 2025, Jefferies analyst Corey Tarlowe reaffirmed a buy rating on Murphy USA, setting a price target of $590.00. Tarlowe’s positive outlook is likely influenced by the company’s strong financial performance and strategic positioning in the market.
💡 Melius Research: Melius initiated coverage on Murphy USA with a buy rating and a price target of $600.00. The firm views the recent decline in Murphy USA’s stock price as an attractive entry point, citing the potential for a 30% upside to reach their price target.
🔽 Downgrades
⚠️ J.P. Morgan: On September 19, 2024, J.P. Morgan analyst John Royall downgraded Murphy USA from neutral to underweight, adjusting the price target from $415.00 to $435.00. This cautious stance may stem from concerns over the company’s valuation metrics or potential headwinds in the retail fuel sector.
These mixed analyst perspectives underscore the importance of considering both the potential opportunities and risks associated with Murphy USA’s stock.
Earnings Report Summary
Murphy USA just released its latest earnings report, and there’s a lot to unpack. The company managed to beat expectations on earnings, but revenue took a bit of a hit. Still, there are some solid takeaways that show where things are headed.
Solid Earnings Despite Revenue Dip
For the fourth quarter of 2024, Murphy USA posted earnings per share of $6.96, coming in ahead of what analysts were expecting at $6.46. That’s a win. However, revenue landed at $4.71 billion, down from $5.07 billion in the same quarter last year. While that might raise a few eyebrows, the company still pulled in a net profit of $142.5 million, which is only slightly lower than the $150 million it made in the previous year’s quarter.
Keeping the Business Running Strong
Murphy USA’s business model continues to hold up well. The company operates more than 1,700 stores across 27 states, and its convenience store business remains a steady source of revenue. Analysts have taken notice, with some even assigning a price target of $600 based on the company’s ability to navigate a challenging market.
One of Murphy USA’s strengths is its cost efficiency and access to key fuel supply chains. The company’s strategic fuel assets, including its seven fuel terminals and access to the Colonial pipeline, help it maintain solid margins even when fuel prices fluctuate.
Expansion and Growth Plans
Looking ahead, Murphy USA isn’t slowing down. The company plans to open up to 50 new stores in 2025, continuing to expand its footprint. Growth in the convenience store segment is a major focus, as the company looks to capitalize on increasing demand and improve customer traffic.
More Cash for Shareholders
Investors got some good news too. Murphy USA announced a slight bump in its quarterly dividend, increasing it by 2.1% to $0.49 per share. It may not be a huge jump, but it shows that the company is committed to rewarding shareholders while also keeping its balance sheet strong.
Looking Ahead
For 2025, Murphy USA expects to generate between $1 billion and $1.12 billion in EBITDA. Analysts are also projecting earnings growth of about 8.58%, with expectations that earnings per share could climb from $26.45 to $28.72. The company is counting on steady merchandise sales and fuel margins to keep growth on track.
Murphy USA’s latest results show a company that’s balancing profitability, growth, and shareholder returns. While revenue slipped, the company is still on solid footing and pushing forward with expansion plans.
Financial Health and Stability
Murphy USA presents a mix of financial strengths and areas that require attention.
Strengths
- Generates strong operating cash flow of $847.6 million, allowing for reinvestment and shareholder returns
- High return on assets at 10.63%, meaning the company efficiently uses its resources
- Maintains profitability despite fluctuations in the fuel market
Areas to Watch
- Total debt stands at $2.37 billion, leading to a debt-to-equity ratio of 281.92%, which is on the high side
- Cash reserves are relatively low at $47 million, meaning the company relies heavily on cash flow rather than holding large amounts of liquidity
- A current ratio of 0.79 suggests short-term liabilities exceed short-term assets, which could become a concern in a downturn
While the company has managed its debt levels well, maintaining financial flexibility will be crucial going forward. As long as earnings remain stable, the high leverage isn’t necessarily a red flag but something investors should keep an eye on.
Valuation and Stock Performance
Murphy USA’s stock has performed well, but how does it stack up from a valuation standpoint?
- Price-to-Earnings (P/E) Ratio: 19.35 (trailing) and 17.73 (forward), suggesting a fair valuation
- Enterprise Value/EBITDA: 11.70, slightly above historical levels but reasonable for its industry
- Price-to-Sales Ratio: 0.48, indicating the stock isn’t overvalued compared to revenue
- Price-to-Book Ratio: 11.12, which is high but normal for capital-intensive businesses with strong earnings
Recent Stock Performance
Murphy USA’s stock has moved higher over the past year, reaching a peak of $561.08 before pulling back. It’s currently trading around $468, which is below both its 50-day moving average of $485.03 and its 200-day moving average of $494.29.
This pullback suggests the stock is in a short-term consolidation phase. Investors looking for an entry point may want to monitor price action in the coming weeks to see if it stabilizes around current levels.
Risks and Considerations
As with any investment, there are risks to consider when evaluating Murphy USA’s long-term dividend potential.
Key Risks
- Fuel Price Volatility: Since Murphy USA is in the fuel retail business, swings in oil prices can affect margins. While the company has done well in managing these fluctuations, external factors like supply chain disruptions and geopolitical tensions could impact earnings.
- Revenue Growth Slowdown: The company’s most recent quarterly revenue declined by 8.10% year-over-year, raising questions about whether sales growth will continue at the same pace.
- High Debt Levels: While Murphy USA has successfully managed its debt so far, carrying a large amount of debt could limit flexibility if economic conditions deteriorate.
- Dependence on Walmart Locations: A significant portion of Murphy USA’s locations are near Walmart stores. While this has been a successful partnership, any changes in this relationship could impact store performance.
Potential Growth Drivers
Despite the risks, there are also key factors that could drive the company’s stock and dividend higher over time:
- Further Dividend Increases: If Murphy USA continues raising its dividend while keeping a conservative payout ratio, it could become more attractive to income-focused investors.
- Stock Buybacks: The company has been reducing its share count through buybacks, which enhances earnings per share. This can be a positive for long-term shareholders.
- Improved Margins: If fuel price spreads widen, Murphy USA could see an increase in profitability, giving it more flexibility to grow dividends.
Final Thoughts
Murphy USA may not be the first company that comes to mind for dividend investors, but it’s shaping up to be an intriguing option for those seeking a mix of income and capital appreciation. The company’s dividend yield is relatively low, but its commitment to increasing payouts and its strong cash flow make it a viable long-term dividend growth stock.
While the company does carry significant debt and faces challenges tied to fuel market fluctuations, its operational efficiency and shareholder-friendly policies offer compelling reasons to keep an eye on it.
For those who prioritize immediate high yields, Murphy USA might not be the best fit. However, for investors looking for a well-managed company with dividend growth potential and solid fundamentals, it could be a valuable addition to a long-term portfolio.
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