Murphy Oil (MUR) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this oil and gas producer is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Murphy Oil, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.35 per share, which is a change of +12.9% from the year-ago reported number.
The Zacks Consensus Estimate for Murphy Oil has increased 65.39% over the last 30 days, as one estimate has gone higher while one has gone lower.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.06 per share, representing a year-over-year change of -15.87%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Murphy Oil. Over the past month, one estimate has moved higher compared to one negative revision, helping the consensus estimate increase 38.42%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Murphy Oil currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Investors have been betting on Murphy Oil because of its solid estimate revisions, as evident from the stock's 9.5% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.