During the recent trading sessions stock of Murphy Oil Corporation (NYSE:MUR) was gathering the crowd in the stock market. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of MUR, the chart has some interesting things to say about where the stock might be headed in the future.
How has the stock performed recently?
Murphy Oil Corporation (NYSE:MUR) in the last month has decreased -3.21%. Shares are now down -13.65% over the past year, underperforming the broad market by -187.61% and underperformed a peer group of similar companies by -39%. After the latest session, which saw the stock close at a price of $24.41, MUR sits -30.63% below its 52-week high. Murphy Oil Corporation (NYSE:MUR) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that MUR may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for MUR is 50.49%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 45.88%, tells a similar story, and suggests that MUR currently trades in neutral territory.
What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. Murphy Oil Corporation (MUR) average trading volume of 2,245,135 during the past month is 26.39% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
MUR is currently undervalued by -8.03% relative to the average 1-year price target of $26.54 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.00, which implies that analysts are generally neutral in their outlook for MUR over the next year.
How risky is the stock?
No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.
Murphy Oil Corporation (NYSE:MUR) has a beta of 2.11, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. MUR therefore has a above average level of market risk. During the past couple of weeks, MUR average daily volatility was 37.21%, which is -2.61 percentage points higher than the average volatility over the past 100 days.