ARKO Corp. (NASDAQ: ARKO)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0001823794
Market Cap 655.96 Mn
P/B 131.19
P/E 51.08
P/S 0.08
ROIC (Qtr) 2.55
Div Yield % 0.49
Rev 1y % (Qtr) -11.34
Total Debt (Qtr) 2.59 Bn
Debt/Equity (Qtr) 9.49
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About

Investment thesis

Bull case

  • Healthy cash reserves of 325.73M provide 2.58x coverage of short-term debt 126.44M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 170.74M provides strong 11.42x coverage of stock compensation 14.96M, indicating sustainable incentive practices.
  • Robust tangible asset base of 3.12B provides 10.86x coverage of working capital 287.51M, indicating strong operational backing.
  • Tangible assets of 3.12B provide robust 19.66x coverage of other current liabilities 158.79M, indicating strong asset backing.
  • Strong cash position of 325.73M provides 2.05x coverage of other current liabilities 158.79M, indicating excellent liquidity.

Bear case

  • Operating cash flow of 170.74M barely covers its investment activities of (127.65M), with a coverage ratio of -1.34, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 170.74M provides thin coverage of dividend payments of (13.76M) with a -12.41 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 43.03M provides weak coverage of capital expenditures of 127.71M, with a 0.34 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 116.01M show weak coverage of depreciation charges of 135.42M, with a 0.86 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 135.42M relative to operating cash flow of 170.74M, which is 0.79x suggests significant maintenance capital requirements affecting free cash flow.

Consolidation Items Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.82 2.23
EV to Cash from Ops. EV/CFO 17.27 14.70
EV to Debt EV to Debt 1.14 79.39
EV to EBIT EV/EBIT 25.41 -40.16
EV to EBITDA EV/EBITDA 13.31 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF 68.52 -286.14
EV to Market Cap EV to Market Cap 4.49 6.33
EV to Revenue EV/Rev 0.38 2.39
Price to Book Value [P/B] P/B 131.19 32.78
Price to Earnings [P/E] P/E 51.08 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.66 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 100.00 14.19
Dividend per Basic Share Div per Share (Qtr) 0.12 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 31.41 18.58
Interest Coverage Int. cover (Qtr) 1.24 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -116.99 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 2.11 33.75
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.35 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -8.10 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -14.02 29.27
EBT Growth (1y) % EBT 1y % (Qtr) -36.16 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) -25.00 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) -78.22 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.44 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.19 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.05 0.04
Cash Ratio Cash Ratio (Qtr) 0.70 0.74
Current Ratio Curr Ratio (Qtr) 1.62 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 9.49 25.92
Interest Cover Ratio Int Coverage (Qtr) 1.24 4.43
Times Interest Earned Times Interest Earned (Qtr) 1.24 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 3.20 -42.64
EBIT Margin % EBIT Margin % (Qtr) 1.48 -131.12
EBT Margin % EBT Margin % (Qtr) 0.28 -64.70
Gross Margin % Gross Margin % (Qtr) 15.20 30.93
Net Profit Margin % Net Margin % (Qtr) 0.20 -65.71