What Does Murphy USA Inc.'s (NYSE:MUSA) Share Price Indicate?

While Murphy USA Inc. (NYSE:MUSA) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NYSE over the last few months. 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. But what if there is still an opportunity to buy? Let’s examine Murphy USA’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Murphy USA

Is Murphy USA Still Cheap?

According to my valuation model, Murphy USA seems to be fairly priced at around 6.0% below my intrinsic value, which means if you buy Murphy USA today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $298.82, then there’s not much of an upside to gain from mispricing. Furthermore, Murphy USA’s low beta implies that the stock is less volatile than the wider market.

What does the future of Murphy USA look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Murphy USA, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

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 optimal 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 advantageous 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 gel your views on MUSA should the price fluctuate below its true value.

If you want to dive deeper into Murphy USA, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Murphy USA (1 is a bit unpleasant) you should be familiar with.

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.

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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.