1- ebitda past 4 quarters is about $60M a year
2- with improvements seen in Q1 and the new sites they bought, ebitda is about $90M
3- cap-ex for maintenance runs about $50M a year
so, FCF is about $40M a year
market cap is $126M
trading at about 3 times FCF
Now if you assume $80M Ebitda and $60M cap-ex, it gives $20M FCF or trading at 6 times FCF
so, it is now trading between 3 to 6 times FCf ..
it seems when TA purchased the additional travel centers in Q1, they considered these "bargain" purchases at 4x EBIT. If that is accurate, and the same measure was applied to TA itself, then TA may be a "bargain" as well?
also I noticed in the 2008 annual report, TA spent $35,000,000.00 on just two (2) travel centers (one in TX and one in Cal.) This of course is an average of $17-18mm/center and this was in a normalized business cycle. Based on the average prices paid for these recent purchases it does appear TA picked these up at fire sale prices. Prime truck stop property is becoming more and more scarce and will become more valuable with time (especially with so many states closing rest areas there are many parts of the U.S. where truck parking is scarce).
just something to think about - assuming TA can stay cash flow positive, and with TA management coming from a REIT background, we may be in more of a real estate play here than what many think?
Like all good real estate it is all about location, location, location. The best sites along the U.S. interstate system are getting more and more scarce. The primo locations will only become more valuable in time and #1-very hard to replace,#2-the cost to build new travel centers in certain areas is already prohibitive, #3- TA management has spent much of their careers actively engaged in the real estate (re:HPT)...I have no doubt of their expertise in the real estate arena.
Again, so long as they can have positive cash flow and buy wonderful real estate at fifty cents on the dollar, the $1B @ high-margin retail, the fuel sales of $6B, the restaurants, the truck/tire repair shops...that is all icing on a very nice cake IMO. The market has woefully undervalued TA for the time being. This will change in time I believe (which is why I have loaded up on this stock).
The recent purchases were indead at fire sale prices...8 centers for total $50M including the cost of renovations is about $6.2M per center!!! Now that is cheap. During spin off they recieved about $20M per center from HPT I believe. In 5 year you see the valuation for these center will be at market price in a stable market fetching above $18-22M per site! Now these site will contribute to the revenue without the cost of rent adding substantially to the bottom line.
ok! sounds like you guys think the 8 sites should be worth around $120M ($15M each) in normal maket and they paid and upgraded it for $50M at expense of 10M shares
$120M is about $4.2 a share
The biz before acquisition was expected to generate around $20M of FCF .. so that is worth about $160M or $5.7 a share
so, am i right for the price target of about $10 a share .. what is analysts price target
quick math....they have approximately $55M cash + $60M dilutive cash + $200M (propeties owned at current valuation including recent 8) + $120M inventories and assests - $97M debt = $338M / 28M shares = $12 BV!!! We are very undervalued and as the economy gets stronger, TA purchases additional sites at such deals, and operations fuel volume and non fuel sales reaches normal levels then the book value of TA will increase substantially.....we will see TA trading in mid $20s to $30s in next couple of years.