Population Growth And Suburban Trends Will Expand Retail Footprint

Key Takeaways

• Accelerated store expansion, disciplined buybacks, and operational efficiency drive outsized growth and resilient earnings even if short-term volumes lag.
  
• Strong positioning in value-focused, high-traffic regions and persistent gasoline demand enable share gains and margin expansion despite evolving industry dynamics.
  
• Murphy USA faces heightened risk from electric vehicle adoption, reliance on Walmart traffic, limited merchandise diversity, digital underperformance, and execution challenges in store expansion.

Catalysts

Together with subsidiaries, engages in marketing of retail motor fuel products and convenience merchandise.

• While analyst consensus sees the acceleration of new store openings as a key growth driver, the company's NTI pipeline and delivery execution are actually running ahead of expectations, underappreciating the rapid compounding impact of over 250 stores in the pipeline and sustained 50+ annual store starts. This scale and momentum can drive outsized revenue growth from both fuel and in-store sales in the coming years.
  
• Share repurchase is already viewed positively, but analysts broadly understate its impact-Murphy USA's persistent and disciplined 50-50 capital allocation strategy, coupled with downside-resistant free cash flow and a conservative balance sheet, means buyback activity is likely to accelerate just as valuations are most attractive, providing even stronger compounding for future EPS growth.
  
• Unlike consensus, the market is missing the magnitude of long-term operating leverage from Murphy USA's cost discipline; multi-year operational efficiency programs, enhanced digital labor scheduling, and self-maintenance initiatives position the company to structurally expand net margins even if volumes temporarily underperform, creating a durable upside to earnings.
  
• Growing population and ongoing suburban expansion are creating a secular uplift for convenience retail in the U.S.; Murphy USA's heavy exposure to high-traffic, value-focused suburban and rural corridors positions it not only to outperform same-store sales but to capture incremental share and unlock higher merchandise and fuel volumes at new and existing locations, supporting double-digit revenue growth potential as suburbanization trends accelerate.
  
• Slow adoption of electric vehicles in the U.S. means the gasoline-powered vehicle end-market will remain robust into the next decade; as other retailers are rationalized or consolidate, Murphy USA's superior scale and procurement leverage allow it to capture share, reinforce pricing power, and structurally sustain higher retail fuel margins-providing a long, visible runway for EBITDA and cash flow expansion well beyond current market expectations.

Murphy USA Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Murphy USA compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Murphy USA's revenue will grow by 8.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 2.9% today to 2.4% in 3 years time.
• The bullish analysts expect earnings to reach $538.7 million (and earnings per share of $31.55) by about September 2028, up from $490.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 23.1x on those 2028 earnings, up from 15.4x today. This future PE is greater than the current PE for the US Specialty Retail industry at 18.7x.
• Analysts expect the number of shares outstanding to decline by 4.72% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.04%, as per the Simply Wall St company report.

Murphy USA Future Earnings Per Share Growth

Risks

• Accelerating consumer adoption of electric vehicles and stricter government climate mandates pose a significant threat to Murphy USA's core fuel business, implying the risk of persistent declines in both station foot traffic and gasoline-driven revenues over time.
  
• Heavy reliance on the Walmart co-location strategy means any sustained shift in Walmart traffic patterns or changes to partnership terms could significantly depress same-store sales and overall revenue stability, as performance does not meaningfully differ between Walmart and non-Walmart sites.
  
• Murphy USA's more limited food, beverage, and overall merchandise diversification compared to larger peers leaves it highly levered to fuel margin fluctuations, exposing it to greater volatility in net margins and earnings during industry downturns or in periods of stagnant volume growth.
  
• While digital initiatives and loyalty programs are underway, the company is playing catch-up relative to industry peers; slow adaptation to digital transformation and technological shifts in retail and convenience may undermine customer retention and erode merchandise contribution, thus pressuring long-term profitability.
  
• The store buildout plan, while robust in the near term, faces execution risks including supply chain and permitting bottlenecks, and a market environment where weak demand trends and sustained lower per-store volume could limit the anticipated contribution of new stores to cash flow and EBITDA growth.

Valuation

• The assumed bullish price target for Murphy USA is $600.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Murphy USA's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $600.0, and the most bearish reporting a price target of just $350.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $22.0 billion, earnings will come to $538.7 million, and it would be trading on a PE ratio of 23.1x, assuming you use a discount rate of 9.0%.
• Given the current share price of $391.28, the bullish analyst price target of $600.0 is 34.8% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.