- Global Partners surprised during 2020 despite the severe economic impact from the Covid-19 pandemic with their operating cash flow surging over 200% year on year.
- The ability of their cash flow performance to swing so wildly is a double-edged sword since it can always swing south, as it did during the first quarter of 2021.
- This has seen their operating cash flow plunge to negative $106m and generally speaking, which highlights their volatility and the associated risks to their distributions.
- When looking elsewhere, their leverage has also reached the very high territory and thus they have minimal ability to sustain distributions throughout any continued negative volatility.
- Since the riskiness of their distributions outweighs the attractiveness of their high 9% distribution yield, I believe that a neutral rating is appropriate.
For further details see:
Global Partners: Performance Surprised During 2020 But That 9% Yield Remains Risky