Murphy USA Inc. (MUSA) stock intrinsic value fair value estimate & owner earnings analysis

Murphy USA sells gasoline and convenience-store goods through 1,800 stores in 27 states: 1,649 Murphy USA and Murphy Express stores, most of them next to Walmart stores in the Southeast, Southwest and Midwest, and 151 QuickChek stores in New Jersey and New York. The model is low fuel prices and high volume. Fuel earned a total margin of 30.7 cents per gallon in 2025 (30.5 in 2024, 31.4 in 2023), and merchandise added $869 million of contribution in 2025, up from $834 million. How we measured earnings. We use owner earnings: cash from operations, less swings in working capital, less stock compensation, less capital spending. Because revenue fell in 2024 and 2025 as fuel prices eased, we counted all capital spending ($440 million in 2025) as a cost, even though part of it builds new stores. Owner earnings per share were $21.46 in 2023, $16.02 in 2024 and $19.40 in 2025 ($379 million in 2025). We used those three years as the anchor (median $19.40 per share) for two reasons. Fuel margins in 2020 to 2022 were abnormally high (2022 reached 34.3 cents per gallon and $30.87 of owner earnings per share) and are not a base to build on. Earlier years also describe a smaller business that did not include QuickChek. Last year owner earnings grew about 14% in total dollars, helped by working capital and lower stock compensation share; we assume only 1.5% growth in year 1 of the base case, which is below that rate. Per-share figures have also been lifted by buybacks (diluted shares fell from about 39.6 million in 2016 to 19.5 million in 2025), but we give no credit for future buybacks, so all values are for the business as it stands today per current share count. Base case: $276 per share. Owner earnings start at $379 million and grow 1.5% a year for 10 years, then stay flat for another 15 years and are then valued at zero. The only growth credited is new stores, which is a proven routine: more than 500 stores have been added since the 2013 spin-off, and the company plans 45 to 55 new stores plus up to 30 rebuilds in 2026 and 50-plus new stores a year after that. Store growth of about 2% a year is offset by falling fuel volume per store (235.8 thousand gallons per month in 2025 versus 244.6 in 2022), so we credit only 1.5%. We give no credit for higher merchandise margins, the food and beverage push at QuickChek, or a fuel margin above the recent 30 to 31 cents. Bear case: $88 per share. Fuel margins fall back toward pre-2020 levels, when owner earnings were $147 million in 2019 and $211 million in 2018. We assume $180 million a year with no growth for 10 years, then a steady decline to zero over 10 more years as fuel demand at these stores erodes. Leverage belongs here: long-term debt was $2.18 billion at the end of 2025, including $300 million of 5.625% notes due 2027, $500 million due 2029 and $500 million due 2031, and it makes a weak margin year harder to absorb. Debt is not subtracted from the base or bull cases, because interest is already paid out of the operating cash flow we start from. Bull case: $337 per share. Owner earnings start at $400 million, about the 2023 to 2025 average, and grow 3.5% a year for 10 years, then stay flat for 15 years. That reflects the new-store program and merchandise contribution growth, which was about 4% in 2025 ($869 million versus $834 million), continuing as the company builds larger stores. What we left out. Any recovery to the 2020 to 2022 fuel margins, benefits from the newly announced larger-store format, and any earnings beyond year 25. What would make this wrong. Fuel margins are the main swing factor: each 1 cent per gallon on about 4.85 billion gallons is about $48 million of pre-tax profit. Walmart also holds rights over many store sites, including rights of first refusal and use restrictions on properties bought from Walmart, and the company depends on Walmart traffic. Our analysis uses the filing for the year ended December 31, 2025; we did not use a later quarterly filing. Margin-of-safety price. The margin-of-safety price is set well below the base value because the base earnings level rests on fuel margins that have already once fallen and risen sharply. $160 per share is about 42% below the base case and about 1.8 times the bear case, which we consider an adequate cushion for a stable but margin-sensitive business.