MUSA Convenience Retail · Fuel retail · Convenience stores · Share buybacks · Thesis updated July 19, 2026

Fuel margins are booming, but may fade

Murphy USA had 1,803 stores in 27 states at March 31, 2026, mostly under the Murphy USA and Murphy Express brands.
The model uses cheap fuel to pull in value-focused drivers, then earns extra profit from snacks, drinks, tobacco, and nicotine products.
Q1 2026 total fuel contribution jumped to 35.0 cents per gallon from 25.4 cents per gallon a year earlier.
The catch is that fuel supply contribution rose to 9.6 cents per gallon, helped by inventory timing that can reverse.
Finn's view is mixed: operations look very strong, but valuation and balance sheet scores leave less room for error.

01 Running thesis

A great quarter with a timing question

Murphy USA is built for price-sensitive drivers. When fuel prices move around, shoppers look harder for a deal. That plays into the company's low-price pitch and can bring more people into its stores.

That is happening now. In Q1 2026, total fuel contribution rose to 35.0 cents per gallon, up from 25.4 cents per gallon in Q1 2025. Management also said Murphy Drive Rewards added about 600,000 loyalty sign-ups in one month, the highest monthly total since 2022.

The hard question is quality of earnings. The Q1 2026 10-Q said fuel supply contribution, including RINs, rose to 9.6 cents per gallon from 1.7 cents per gallon. A big part came from market pricing and the timing of inventory movements, not from a permanent change in store-level retail margins.

The long-term plan still rests on opening about 45 to 55 new stores a year, improving QuickChek, and keeping merchandise profit growing. But the stock already gets credit for strong execution, while the current fuel margin boom may not last.

May 2026▲The Q1 2026 10-Q confirmed a sharp fuel margin lift, with total fuel contribution at 35.0 cents per gallon. The view only moved up modestly because much of the supply gain came from inventory timing and market effects that may reverse.

Apr 2026▲The Q1 2026 call showed fuel volatility turning from a headwind into a tailwind. Record loyalty sign-ups also suggested value-seeking customers were choosing Murphy more often.

Feb 2026→The Q4 2025 call kept the new store growth case intact, but also showed near-term costs from opening many stores. Management said the path to its long-term EBITDA goal still depends partly on a more normal fuel market.

Oct 2025▲Q3 2025 strengthened the case with better same-store fuel trends, stronger nicotine-led merchandise profit, a larger new store plan, and a new $2.0 billion buyback authorization.

Jul 2025▲Q2 2025 eased the fear of a deep fuel volume slide as July volumes rebounded to prior-year levels. Cost control also helped protect store profitability when merchandise pressure appeared.

May 2025→Q1 2025 showed strong new store economics and large buybacks, but same-store fuel gallons fell 4.2%. The debate became whether new units could offset weaker traffic in the existing base.

Feb 2025▲Q4 2024 supported the core plan with continued store growth, better merchandise contribution, and more buybacks. The QuickChek issue looked less material at that point.

Oct 2024→No thesis change was made because the Q3 2024 transcript could not be retrieved. The prior view based on Q2 2024 remained in place.

02 Business model

Cheap gas feeds the store

Murphy USA makes most of its sales from fuel, but fuel also acts like an ad. Low posted gas prices bring drivers to the lot. Once there, some buy higher-margin items inside, like beverages, snacks, tobacco, and nicotine products.

The core banners are Murphy USA and Murphy Express. Many stores sit close to Walmart, which helps traffic and fits the value message. At March 31, 2026, the company had 1,655 Murphy branded stores and 148 QuickChek stores.

The company also earns from fuel supply work. That includes buying fuel well, using terminals, blending renewable fuels, and selling RINs, which are credits tied to renewable fuel rules. This can help profit, but it can swing with markets and rules.

Cash is used for new stores, store rebuilds, dividends, and share repurchases. The tradeoff is leverage and execution risk. At March 31, 2026, long-term debt was about $2.16 billion, so steady cash flow matters.

03 Product portfolio

What customers buy

Cash cow

Retail fuel

Fuel brings in the largest sales dollars and drives traffic. In Q1 2026, petroleum product sales were $3.7 billion.

Option

Fuel supply and RINs

Murphy can earn extra profit from fuel sourcing, blending, and renewable fuel credits. This helped Q1 2026 results, but the inventory timing benefit may reverse.

Steady

Nicotine and tobacco

This is a key in-store profit pool. Q1 2026 same-store nicotine margin grew 10.4%, helped by promotions and the shift into newer nicotine products.

Steady

Packaged drinks and snacks

Packaged beverages, beer, candy, and salty snacks support the convenience store basket. These products are less tied to big-ticket consumer spending.

Option

QuickChek prepared food

QuickChek has more food and beverage exposure than the core Murphy stores. It could add growth if the menu simplification and sales-first push work.

Growth engine

New stores

The company is targeting about 45 to 55 new stores annually. Newer classes have been a key part of the long-term growth plan.

04 Business segments

One segment, three revenue streams

Petroleum product sales77%modest

Merchandise sales22%modest

Other operating revenues1%growing fast

Murphy USA reports one operating segment, Marketing. The mix below uses Q1 2026 Marketing operating revenues from petroleum product sales, merchandise sales, and other operating revenues.

05 Risk factors

What could break the story

Fuel margin snapback

High impact · Medium odds

Q1 2026 fuel profit was unusually strong. Total fuel contribution reached 35.0 cents per gallon, but fuel supply contribution rose mainly from market pricing and inventory timing. If those gains fade in Q2 or Q3, earnings could fall even if stores run well.

We watchTotal fuel contribution and fuel supply contribution in cents per gallon, especially whether supply falls back toward normal levels.

Same-store fuel gallon pressure

High impact · Medium odds

Fuel gallons are the traffic engine. In Q1 2026, same-store fuel gallons were still down 0.8%, even though total retail fuel volumes grew 2.1%. If competition forces Murphy to cut prices while gallons still shrink, profit per store can tighten.

We watchSame-store fuel gallons and management comments on pricing against new local competitors.

QuickChek turnaround stalls

Medium impact · Medium odds

QuickChek competes more with quick service restaurants, meaning fast food chains, in the Northeast. Management is trying to simplify the menu and build a more sales-focused store culture. If the culture shift fails, QuickChek may keep dragging merchandise trends.

We watchQuickChek food sales, merchandise margin, and any H2 2026 proof points management gives on the new store playbook.

Nicotine promotion comparison

Medium impact · Medium odds

Nicotine has been a strong merchandise driver. Q3 2025 benefited from major promotional activity, which creates a tough comparison. If new promotions are smaller or less effective, reported merchandise growth could slow.

We watchSame-store nicotine sales and margin growth, especially in Q3 2026.

Capital return strain

Medium impact · Low odds

Murphy USA buys back stock and is still building stores. That can work well when cash flow is strong, but the company also carries meaningful debt. If fuel margins normalize while capital spending stays high, buybacks may become less flexible.

We watchFree cash flow, total leverage ratio, revolver borrowings, and the pace of share repurchases.

06 Quick answers

In one breath

How does Murphy USA make money?

It sells fuel, convenience merchandise, and earns extra supply profit from fuel sourcing and renewable fuel credits. Fuel brings customers to the store, while merchandise usually carries higher margins.

Why are fuel margins so important for MUSA?

Fuel margins can move fast with crude oil, wholesale prices, local competition, and inventory timing. In Q1 2026, total fuel contribution jumped to 35.0 cents per gallon, which drove a big profit lift.

What is QuickChek, and why does it matter?

QuickChek is Murphy USA's Northeast convenience store and fuel brand. It has more prepared food exposure, so it competes more with quick service restaurants and needs better in-store execution.

Is Murphy USA mainly a growth stock or a cash return story?

It is both, but with limits. The company is targeting about 45 to 55 new stores a year and also returns cash through dividends and buybacks, while still needing to manage debt and fuel margin swings.