Head to Head Review: GAP (NYSE:GAP) & Murphy USA (NYSE:MUSA)

Murphy USA (NYSE:MUSA) and GAP (NYSE:GAP) are both mid-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitability, earnings and dividends.

Earnings & Valuation

This table compares Murphy USA and GAP”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Murphy USA	$23.26 billion	0.41	$470.60 million	$35.67	14.40
GAP	$15.37 billion	0.50	$816.00 million	$3.35	6.59

GAP has lower revenue, but higher earnings than Murphy USA. GAP is trading at a lower price-to-earnings ratio than Murphy USA, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Murphy USA and GAP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Murphy USA	2.85%	96.37%	13.56%
GAP	8.14%	19.72%	5.94%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Murphy USA and GAP, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Murphy USA	0	5	6	0	2.55
GAP	1	12	6	2	2.43

Murphy USA currently has a consensus target price of $606.33, indicating a potential upside of 18.05%. GAP has a consensus target price of $27.07, indicating a potential upside of 22.55%. Given GAP’s higher probable upside, analysts plainly believe GAP is more favorable than Murphy USA.

Institutional & Insider Ownership

80.8% of Murphy USA shares are held by institutional investors. Comparatively, 58.8% of GAP shares are held by institutional investors. 9.0% of Murphy USA shares are held by company insiders. Comparatively, 31.0% of GAP shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Murphy USA pays an annual dividend of $2.88 per share and has a dividend yield of 0.6%. GAP pays an annual dividend of $0.70 per share and has a dividend yield of 3.2%. Murphy USA pays out 8.1% of its earnings in the form of a dividend. GAP pays out 20.9% 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 4 consecutive years and GAP has increased its dividend for 1 consecutive years.

Risk & Volatility

Murphy USA has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, GAP has a beta of 2.05, indicating that its stock price is 105% more volatile than the S&P 500.

Summary

Murphy USA beats GAP on 9 of the 17 factors compared between the two stocks.

About Murphy USA

Murphy USA Inc. engages in marketing of retail motor fuel products and convenience merchandise. The company operates retail stores under the Murphy USA, Murphy Express, and QuickChek brands, as well as operates non-fuel convenience stores. It operates retail gasoline stores principally in the Southeast, Southwest, and Midwest United States. Murphy USA Inc. was founded in 1996 and is headquartered in El Dorado, Arkansas.

About GAP

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.