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Can Murphy Oil’s Stock Price Continue to Rise?

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May. 10 2016, Updated 10:08 a.m. ET

Murphy Oil’s stock price action

Murphy Oil (MUR) announced its 1Q16 earnings on May 4, 2016, after the Market closed. Following its earnings, there was an opposing reaction. Better-than-expected earnings saw Murphy Oil’s stock price fall by 7.8% the next day.

It must be noted that, in the last three months leading into the earnings, Murphy Oil’s stock price rose by a whopping ~95%, mainly due to the ~58% bounce in crude oil (USO) (SCO) (DWTI) prices during the same period.

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Murphy Oil’s stock price trend changed

Falling crude oil (UCO) and natural gas (UGAZ) prices over the last two years led to a falling trend in the entire upstream sector. Murphy Oil wasn’t an exception. Since January 2016, as you can see in the above graph, Murphy Oil’s stock is in a new uptrend. It’s clearly making a pattern of higher highs and higher lows.

Murphy Oil’s relative performance

For 2016, Murphy Oil is outperforming other upstream companies. For 2016, it’s up by ~38%. Other oil and gas producers such as RSP Permian (RSPP) and Approach Resources (AREX) are up by ~25% and ~34%. EV Energy Partners (EVEP) fell by ~14%. The Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas related equities from the S&P 500.

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Murphy Oil’s stock price movement after past earnings beats

In the last six quarters, there were four occasions in its 4Q15, 3Q15, 2Q15, and 4Q14 earnings when Murphy Oil beat the earnings expectations.

Murphy Oil reported its 4Q15 earnings after the Market closed on January 27, 2016. In 4Q15, excluding one-time items, Murphy Oil reported an EPS (earnings per share) of -$0.76 per share. This was $0.55 better than the consensus for an EPS of -$1.31 per share. Following the earnings release, better-than-expected earnings saw Murphy Oil’s stock price rise by ~8% in two sessions.

In its 3Q15 earnings, Murphy Oil reported an EPS of -$0.72 per share. This is $0.21 better than the consensus for an EPS of -$0.93 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 observed after its 4Q14 earnings. Murphy Oil’s stock price rose by ~19% in just 11 sessions after beating consensus earnings estimates by $0.14 per share.

Contrary to the three occasions above, Murphy Oil’s 2Q15 post-earnings reactions were decidedly negative despite beating earnings estimates by $0.05 per share—mainly due to falling crude oil and natural gas prices.

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