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Global Partners LP Message Board

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  • jrad52 jrad52 Oct 6, 2011 3:15 PM Flag

    Earnings estimates keep going down

    Normally I'd agree. But with oil prices dropping, doesn't that usually help GLP? More volume sold, less financing costs. And maybe some opportunitistic buys?

    I said I would buy back in sround $ 20, but even $ 16.90 isn't quite tempting enough just now.

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    • jrad52 Do you currently own glp? What do you suggest doing for someone who currently owns 1600 shares? Would you sell or do you expect a rebound next year? Is the company fundamentally sound or do you know? Your thoughts , please. Thanks

      • 1 Reply to jcsreits
      • I don't own it. I used to, but sold - one of the few bullets I dodged this year.

        Essentially, I think GLP is in a tough business but it's not one that I want to own. They're just a distributor. They distribute oil rather than cars or computers, or whatever, but they are still a distributor with lousy margins and too much debt.

        GLP's highest operating margin was a bit more than 1% in 2006. Most years, the operating margin is around .5% and so far this year, it's lower. And those numbers are before the gas station business, which I don't like at all.

        If you assume that at normal oil prices, GLP could gross $ 10 billion, an operating margin of .5% produces $ 50 million of operating income. They're at a run rate of $ 30 million in interest expense, leaving $ 20 million profit, or a little less than a dollar per unit. Bump up the operating margin a little, and they make more, but never a whole lot.

        And with GLP, I don't think you can ignore depreciation expense. I think for the most part its assets do depreciate.

        So I still don't want to buy it. After Q3 earnings, I think the price drops again.

        As to what you should do, I can't help. If you saw my other MLPs and how they have tanked in the last month or 2, you wouldn't want my advice. But I'm not buying GLP here.

    • Paying the vig on the gas stations is draining.Also in this day and age Mobil is the last place I`d go.It`s too expensive.You save $2 or $3 by going across the street to Hess.Dishing out $2/yr on distribution is alot when you are not making $2/share in profit.

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