- CrossAmerica Partners reported quite strong results for the third quarter of 2020 but for the time being, their very high distribution yield of around 15% still remains risky.
- Unlike their results for the second quarter of 2020, these were not just due to good fortune stemming from favorable working capital movements.
- If they continue their strong underlying cash flow performance from the third quarter of 2020, they have a chance at covering their distributions with free cash flow.
- This is critical for sustaining their distributions since their leverage is high despite improving recently whilst their liquidity is weak, which further heightens risks.
- Given this situation, I will be maintaining my neutral rating but if their strong performance continues, it could be changed to a bullish rating.
For further details see:
CrossAmerica Partners: Distributions Still Risky Despite A Strong Quarter