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Judging Murphy Oil’s Stock Price Action after Its 4Q15 Earnings

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Murphy Oil’s stock price action on the day of 4Q15 earnings

Murphy Oil (MUR) announced its 4Q15 earnings on January 27, 2016, after the market closed. On the day of its earnings announcement, MUR’s stock price increased by 2.45% to close at $18.14. In after-hours price action, Murphy Oil’s stock price traded as low as $18.01 before trading closed.

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MUR’s stock price in steep downtrend

Declining crude oil and natural gas prices over the last year are dragging the entire upstream sector into a downtrend. As shown in the above chart, Murphy Oil’s stock price is in a steep downtrend, where it is making a clear pattern of lower highs and lower lows. In the last two months, MUR’s stock price has declined by ~42%.

MUR’s relative performance

For 2015, Murphy Oil (MUR) had underperformed the S&P 500 ETF (SPY) because MUR had lost ~56%, whereas the S&P 500 was almost flat during the same period. Compare this with the SPDR S&P Oil and Gas Exploration & Production ETF (XOP), which was down ~36% in 2015.

Oil and gas producers Occidental Petroleum (OXY), Pioneer Natural Resources (PXD), and EOG Resources (EOG) were down ~13%, ~16%, and ~23%, respectively.

MUR’s stock price performance after past earnings beat

In the last year, the 3Q15 and 4Q14 earnings revealed that Murphy Oil (MUR) beat the earnings expectations by a delta of equal to or greater than $0.10 per share.

Murphy Oil reported its 3Q15 earnings, after the market close, on October 28, 2015. In 3Q15, excluding the one-time items, MUR reported a loss of $0.72 per share. This was $0.20 better than consensus for a loss of $0.92 per share. Following the earnings release, better-than-expected earnings saw Murphy Oil’s stock price increase by ~15% in just six sessions.

A similar upward reaction was also observed after the 4Q14 earnings, when Murphy Oil’s stock price increased by ~19% in just 11 sessions after beating the consensus earnings estimates by $0.10 per share.

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