The Remarkable Success and Share Repurchasing Strategy of Murphy USA

Saturday, 6 April 2024, 08:50

Murphy USA's extraordinary journey to a 1,000% total return since 2013 is fueled by its aggressive share repurchasing approach and low-price business model. With over 55% of outstanding shares bought back, the company's growth potential remains strong. Its focus on value proposition, partnership with Walmart, and steady expansion plans set the stage for enduring success in the convenience store industry.
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The Remarkable Success and Share Repurchasing Strategy of Murphy USA

The Remarkable Success and Share Repurchasing Strategy of Murphy USA

This cash-generating machine shows no signs of slowing despite quickly becoming a multibagger. Convenience-store chain Murphy USA (NYSE: MUSA) has delivered a total return of 1,000% since its 2013 spinoff from Murphy Oil, more than tripling the returns provided by the S&P 500 index. Murphy USA's insatiable appetite for its shares has aided these staggering returns. Buying back more than 55% of its outstanding shares over this time has made the company an unlikely multibagger for buy-and-hold investors.

But it's much more than a share-repurchasing, one-trick pony. Here's what sets the company up for enduring success over the coming decades.

Murphy USA's low-price focus amplifies its growth story

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The company plans to increase its store count by 45 to 50 (or 3%) annually through 2028, taking this low-price business model to new markets. There are ample geographic greenfield opportunities ahead of it -- paired with the majority of convenience stores being unable to compete with the company's pricing. So Murphy could see decades of steady growth ahead.

The power of share repurchases

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While FCF grew by 138% over the last decade, the company's FCF per share ballooned fivefold thanks to a lower share count. Murphy's scale, its expansion plans, and the growing cash flows leave the company primed to continue reducing its share count far into the future.

Should investors buy shares, too? Total returns are north of 1,000% since 2013, and Murphy's incredible past performance -- and remaining potential -- have caught the market's attention.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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