Yahoo Finance What Is Murphy USA Inc.'s (NYSE:MUSA) Share Price Doing?
Murphy USA Inc. (NYSE:MUSA), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Murphy USA’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Murphy USA
What is Murphy USA worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.4% below my intrinsic value, which means if you buy Murphy USA today, you’d be paying a fair price for it. And if you believe the company’s true value is $174.60, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Murphy USA’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Murphy USA?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -9.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Murphy USA. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, MUSA appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MUSA for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on MUSA should the price fluctuate below its true value.
Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 2 warning signs with Murphy USA, and understanding them should be part of your investment process.
If you are no longer interested in Murphy USA, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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