Murphy USA Inc. (NYSE:MUSA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s statutory forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
Following the upgrade, the latest consensus from Murphy USA’s five analysts is for revenues of US$15b in 2021, which would reflect a huge 57% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to crater 43% to US$7.55 in the same period. Prior to this update, the analysts had been forecasting revenues of US$13b and earnings per share (EPS) of US$7.41 in 2021. There’s clearly been a surge in bullishness around the company’s sales pipeline, even if there’s no real change in earnings per share forecasts.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Murphy USA’s growth to accelerate, with the forecast 57% growth ranking favourably alongside historical growth of 2.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Murphy USA to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion from this consensus update is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Murphy USA.
Analysts are clearly in love with Murphy USA at the moment, but before diving in – you should be aware that we’ve identified some warning flags with the business, such as a weak balance sheet. You can learn more, and discover the 1 other warning sign we’ve identified, for free on our platform here.
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