 Murphy Oil Corp (MUR, Financial) is an international oil and gas company, with exploration and production interests worldwide. The key resources are in the U.S. and Malaysia.
Revenues
Looking at profitability, revenue grew by 4.72% and led earnings per share increased in the most recent quarter compared to the same quarter a year ago ($1.51 vs $1.41). During the past fiscal year, the company reported lower earnings of $4.69 versus $4.95 in the prior year. For the next year, Wall Street expects a contraction of 15.8% in earnings ($3.95 versus $4.69).
Margins
The gross profit margin is considered high, at 79.45% and has increased when compared to last year's quarter. The net profit margin of 11.11% is ranked higher than 83% of the 1093 Companies in the Oil & Gas E&P industry.
Profitability
Let´s compare the best measure of performance for a firm's management: the return on equity. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.
| Ticker | Company | ROE (%) |
| MUR | Murphy Oil | 7.11 |
| WLL | Whiting Petroleum Corp | 8.99 |
| ECA | Encana Corp | 47.07 |
| CXO | Concho Resources Inc | 12.11 |
| XEC | Cimarex Energy Co | 15.41 |
| Â | Industry Median | -0.2 |
The company has a current ROE of 7.11%, which is higher than the industry median but lower than the ones exhibit by Whiting Petroleum (WLL, Financial), Concho Resources Inc. (CXO, Financial) and Cimarex (XEC, Financial). In general, analysts consider ROE ratios in the 15-20% range as representing attractive levels for investment. So for investors looking those levels or more, Encana (ECA, Financial) could be the option.Â
Relative Valuation
In terms of valuation, the stock sells at a trailing P/E of 15.7x, trading at a discount compared to the industry median. To use another metric, its price-to-book ratio of 1.1x indicates a discount versus the industry average of 1.42x while the price-to-sales ratio of 1.8x is below the industry average of 3.68x.
This chart shows the stock price has an upward trend in the five-year period.
Principal Risks
The main risk is a drop in oil and gas prices which would hurt the company´s revenues. Other risks are those associated with execution risk in case of delay or increased costs in specific projects. Finally, we can mention de political risk in developing countries.
Third Point
Last year the company had additional pressure from shareholders, including the activist investor Third Point. They wanted an increase in leverage and more repurchases and dividends. The current dividend yield is 2.5% and is ranked lower than 69% of the 352 Companies in the Oil & Gas E&P industry.
