On August 5, Murphy USA (NYSE:MUSA) reported second-quarter results that make the case for its unglamorous business model. Net income came in at $209.1 million, or $11.27 per diluted share, up from $145.6 million and $7.36 per share in the same quarter of 2025. Adjusted EBITDA climbed to $377.3 million from $286.0 million. For a company that mostly sells gasoline and convenience store snacks, that is a striking jump, and it did not come from a single lucky quarter.
Fuel Margins Carry The Quarter
The engine behind the gain was fuel. Total fuel contribution reached 40.6 cents per gallon in the quarter, up from 32.0 cents a year earlier, while the retail fuel margin alone rose 20.2% to 35.1 cents per gallon. Volume grew at the same time, with total retail gallons up 3.9% and same-store sales volumes up 0.5%, so Murphy USA was not just pricing better; it was also moving more gas through its pumps. Merchandise held up its end too, with contribution dollars up 4.0% to $227.4 million on unit margins of 20.1%, as nicotine contribution rose 6.1% and non-nicotine contribution grew 2.9%.
The company kept returning cash to shareholders through it all, buying back 143.1 thousand shares for $76.8 million and raising its quarterly dividend 28.0% year over year to $0.64 per share. In May, it issued $500 million of notes due 2034 and used the proceeds to retire $300 million of 2027 notes, pushing out its debt maturities while continuing to open new stores, with six net additions in the quarter and 36 more under construction.
Costs Are Creeping Up Too
The quarter’s growth came with a heavier expense load. Total store and other operating expenses rose to $308.7 million from $275.2 million, and the company said two-thirds of that increase came from payment processing fees, which climb automatically as retail fuel prices rise. SG&A costs increased to $60.5 million from $50.9 million on higher employee costs and incentive accruals, and the effective tax rate ticked up to 24.7% from 24.4%, with guidance now pointing to the higher end of the company’s 23% to 25% full-year range.
Fuel supply contribution, excluding renewable credits, was negative $54.9 million, a wider loss than the negative $25.9 million posted a year earlier. Management’s own full-year outlook assumes some cooling ahead: its projection of roughly $636 million in net income and $1.25 billion in Adjusted EBITDA is built on second-half fuel margins averaging 35 cents per gallon, down from 37.9 cents in the first half. Capital expenditures are also being guided to the higher end of the $475 million to $525 million range, meaning the spending pace is not slowing even as margins are expected to.
Wall Street Watches And Waits
Hedge fund ownership slipped slightly, with 40 funds holding a position in the most recent quarter versus 41 in the prior one, a modest pullback rather than a rush for the exits. Short interest sits at 3.98% of the float, a level that signals some skepticism but nothing close to a crowded bearish trade. The stock trades at a forward P/E of 17.67 as of September 4, a multiple that assumes fuel margins hold up reasonably well rather than reverting sharply toward historical norms. None of these figures point in a dramatic direction on their own, which is itself notable given how much earnings jumped this quarter.
What Happens If Margins Cool
Murphy USA’s second quarter shows a business converting favorable fuel margins and steady merchandise growth into real earnings power, while still funding buybacks, a bigger dividend, and new store construction. The open question is how much of this quarter’s strength was cyclical. Management itself is underwriting a second half fuel margin lower than the first half’s, and rising payment fees mean that even higher fuel prices carry a cost alongside a benefit. If fuel margins hold anywhere near recent levels, the current store growth and merchandise gains give the business more to work with.
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