Our proprietary POWR Ratings system grades stocks based on 118 factors, each weighted optimally. The system upgrades and downgrades stocks based on changes in these factors. Murphy Oil Corporation (MUR) and Centrus Energy Corp. (LEU) have been recently upgraded in our rating system.
MUR operates as an oil and natural gas exploration and production company in the United States, Canada, and internationally. The company explores and produces crude oil, natural gas, and natural gas liquids.
On the other hand, LEU provides nuclear fuel and services for the nuclear power industry in the United States, Japan, Belgium, and internationally. It operates through Low-Enriched Uranium (LEU); and Technical Solutions segments.
MUR has declined 30% in price over the past month, while LEU has plunged 1.5%. However, MUR’s shares have gained 8.3% year-to-date versus LEU’s 44% decline. Moreover, in terms of the past year’s performance, MUR is the clear winner with 33.4% gains versus LEU’s positive returns of 18.3%.
Which stock is a better buy now? Let’s find out.
Latest Developments
In April, MUR achieved its first oil at King’s Quay floating production system, with two of seven planned wells flowing from the Khaleesi, Mormont, Samurai field development project in the Gulf of Mexico. Achieving first oil on schedule and within budget illustrates the competitive advantage of the company’s industry-leading offshore execution ability.
Also, in the same month, MUR declared a 17% year-over-year increase in the quarterly dividend to $0.175 per share, paid on June 1. It represents a 40% increase from the fourth quarter of 2021. The increase in dividends reflects the company’s strong financial position.
On June 23, LEU’s request to make high-assay low-enriched uranium fuel (HALEU) at its facility in Piketon, Ohio, was approved by the U.S. Nuclear Regulatory Commission (NRC). The plant is now the only licensed HALEU production facility in the United States.
The amended license allows the facility to produce HALEU by enriching uranium up to 20% with uranium-235. This approval might help the company re-establish its domestic nuclear fuel supply chain and boost its profitability.
Recent Financials Results
MUR’s revenues and other income increased 45.5% year-over-year to $552.96 million for the fiscal 2022 first quarter ended March 31, 2022. The company’s adjusted EBITDA attributable to Murphy grew 41.7% from the prior-year period to $361.30 million.
Also, its adjusted income from continuing operations attributable to MUR and adjusted income from continuing operations per share came in at $113.30 million and $0.73, up 1,068% and 1,116.7 year-over-year, respectively.
LEU’s revenue decreased 36.5% year-over-year to $35.30 million, and its gross profit declined 46.2% from the year-ago value to $6.3 million for the fiscal 2022 first quarter ended March 31, 2022.
The company’s net loss amounted to $0.40 million, compared to a net income of $5.10 million in the prior-year period. Also, its adjusted net loss per share came in at $0.03, compared to the adjusted net income per share of $0.33 in the corresponding period in 2021.
Past and Expected Financial Performance
MUR’s revenue and EBITDA have grown at CAGRs of 14.2% and 7% over the past three years. Analysts expect ADM’s revenue and EPS to increase 58.3% and 153.3%, respectively, in the fiscal 2022 second quarter (ended June 2022). The company’s revenue and EPS for the ongoing year (ending December 2022) are expected to grow 52.9% and 351.5%, respectively.
FMC’s revenue has grown at a CAGR of 12.4% over the past three years. However, its EBITDA has dropped at a CAGR of 7.6% over the past three years. Also, analysts expect LEU’s revenue and EPS to decline 7.1% and 26.6%, respectively, in the fiscal 2022 second quarter (ended June 2022).
The company’s revenue and EPS for the current year (ending December 2022) are expected to decline 14.4% and 68.7%, respectively.
Profitability
MUR’s trailing-12-month revenue is 11.08 times what LEU generates. Moreover, MUR is relatively more profitable, with a gross profit margin and EBITDA margin of 81.72% and 48.31% compared to LEU’s 39.24% and 25.79%, respectively.
Furthermore, MUR’s levered FCF margin of 37.64% is higher than LEU’s 22.03%.
POWR Ratings
MUR's overall B rating equates to a Buy in our proprietary POWR Ratings system. In contrast, LEU’s overall rating has been upgraded to C, which translates to Neutral.
MUR has a B grade for Quality, consistent with its trailing-12-month CAPEX/Sales of 21.91%, which is 110.6% higher than the industry average of 10.40%. However, LEU has a C grade for Quality, which is in sync with its 0.32% trailing-12-month CAPEX/Sales, 96.9% lower than the industry average of 10.40%.
Of the 97 stocks in the B-rated Energy - Oil & Gas industry, MUR is ranked #38. On the other hand, LEU is ranked #77 out of 85 stocks in the B-rated Industrial - Services industry.
Beyond what I’ve stated above, we have also rated the stocks for Sentiment, Growth, Value, Stability, and Momentum. Click here to view all the MUR ratings. Also, get all the LEU ratings here.
The Winner
Our proprietary rating system recently upgraded MUR and LEU. However, given robust financials, favorable revenue and earnings estimates, and high profitability, MUR is a better buy here.
Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View the top-rated Energy - Oil & Gas stocks here. Also, access the top-rated Industrial - Services stocks here.
MUR shares were trading at $29.72 per share on Monday afternoon, up $1.45 (+5.13%). Year-to-date, MUR has gained 14.97%, versus a -18.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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