Murphy USA (NYSE:MUSA) and Lithia Motors (NYSE:LAD) are both mid-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.
Profitability
This table compares Murphy USA and Lithia Motors' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Murphy USA | 3.14% | 45.51% | 14.02% |
| Lithia Motors | 2.82% | 23.52% | 6.02% |
Risk and Volatility
Murphy USA has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Lithia Motors has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500.
Insider and Institutional Ownership
80.2% of Murphy USA shares are held by institutional investors. Comparatively, 83.4% of Lithia Motors shares are held by institutional investors. 7.1% of Murphy USA shares are held by insiders. Comparatively, 4.0% of Lithia Motors shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Murphy USA and Lithia Motors' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Murphy USA | $14.03 billion | 0.24 | $154.80 million | $5.23 | 23.80 |
| Lithia Motors | $12.67 billion | 0.79 | $271.50 million | $11.76 | 31.85 |
Lithia Motors has lower revenue, but higher earnings than Murphy USA. Murphy USA is trading at a lower price-to-earnings ratio than Lithia Motors, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent recommendations for Murphy USA and Lithia Motors, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Murphy USA | 1 | 0 | 0 | 0 | 1.00 |
| Lithia Motors | 1 | 5 | 5 | 0 | 2.36 |
Murphy USA presently has a consensus target price of $142.00, suggesting a potential upside of 14.07%. Lithia Motors has a consensus target price of $327.4545, suggesting a potential downside of 12.56%. Given Murphy USA's higher probable upside, equities analysts clearly believe Murphy USA is more favorable than Lithia Motors.
Dividends
Murphy USA pays an annual dividend of $1.00 per share and has a dividend yield of 0.8%. Lithia Motors pays an annual dividend of $1.24 per share and has a dividend yield of 0.3%. Murphy USA pays out 19.1% of its earnings in the form of a dividend. Lithia Motors pays out 10.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Murphy USA has increased its dividend for 1 consecutive years and Lithia Motors has increased its dividend for 7 consecutive years.
Summary
Lithia Motors beats Murphy USA on 10 of the 17 factors compared between the two stocks.
