What happened

Shares of Murphy USA (NYSE:MUSA) popped 38.3% in October, according to data from S&P Global Market Intelligence, as the gas-station chain announced strong third-quarter earnings relative to expectations.

So what

After drifting higher throughout the month ahead of its quarterly update, Murphy USA stock rallied more than 24% on Oct. 31 alone after the release hit the wires.

A person holds an orange gasoline nozzle as it fills up a white car.


On one hand, Murphy USA confirmed that its operating revenue had actually fallen 3.4% year over year, to $3.656 billion, as lower petroleum product sales all but offset a 9.2% increase in merchandise revenue. But the company's net income soared more than 50% to $69.2 million, or $2.18 per share. By comparison, most analysts were modeling higher revenue of $3.75 billion, but significantly lower earnings of $1.58 per share.

"The third-quarter performance clearly demonstrates some of the benefits of recent investments as adjusted EBITDA grew 51% over the prior year, capitalizing on market share gains in both the fuels and merchandise business," stated Murphy USA CEO Andrew Clyde. "New stores are also outperforming the network, which gives us a high level of confidence ahead of an increase in our organic growth over the next several years."

Now what

During the subsequent conference call, Clyde elaborated that 2019 has shown them their success "is not dependent on consistently higher and higher and higher fuel margins, but rather our ability to continue to generate sustainable top- and bottom-line productivity gains across our operations -- increasing contribution dollars from both fuel and merchandise -- and to build economically viable, high-performing stores that are accretive to our network average."

In the end, backed by Murphy USA's bottom-line outperformance in the third quarter, that assurance was exactly what investors wanted to hear -- and Murphy USA stock responded in kind.

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