CA - Parkland Corporation: Cheaper Than Peers For A Reason

2024-01-29 01:30:52 ET

Summary

• Parkland Corporation is a Canadian company engaged in the retail and wholesale marketing of fuels and petroleum products.
• It's common for companies of this nature to derive a portion of their income from convenience stores, but Parkland's reliance on this segment is notably low.
• While its EBITDA has grown more than its competitors, it has been achieved with lower margins, worse ROCE and more debt.
• I see no reason to invest in Parkland stock over Alimentation Couche-Tard, Casey's or Murphy USA. That's why it's a 'sell' for me.

Investment Thesis

In my previous analyses of companies operating gas stations, I found the business model attractive, primarily due to the non-fuel revenue generated by convenience stores. However, Parkland ( PKI:CA ) ( OTCPK:PKIUF ) stands out as having a weaker aspect in this regard, with over 95% of its revenue tied to fuel sales. Additionally, it carries more debt, exhibits lower margins, and has a lower Return on Capital Employed compared to its peers....

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