Thank you for an excellent analysis. At first, I misunderstood a few... Nontheless, it gave me an assurance on my thoughts.
A nice agreeable analysis. I would like to point out a few things however.
First, the 7 mil biofuel tax credit amounts a drop in a gallon. Second, the fuel margin in Q1 did not disappear and it doesn't seem that it will disappear anytime soon. And we know that it is not the fuel margin but the non-fuel sales that matter the most. Third, c-store count is not 45 anymore. Last week, they closed the deal on 19 c-strores.
As bwisheldon pointed out, Q4 is a worse quarter along with Q1. If TA posts a comparable profit in Q1, say 60 or 70 cents, what do you think people will be willing to pay for TA? I guess $30 at least.
As job market improves, more people will travel. As gas price so low, more people will travel on their cars and spend more money when they stop by.
your math is completely wrong. due to that 11 cents extra fuel margin, gross incomes have 70 cents boost, not the net. Do you know the differences between them? Do you read fuel market at all? The fuel margin did not drop back 11 cents in Q1 and won't drop any time soon. Your post is LAUGHABLE, though I rarely say anything negatively toward other posts.
If TA reports anything above 80 cents in Q1, since Q4 and Q1 are worse quarters, it is reasonable to guess the annual number being close to $5, and not anything less than $4. Or even a 60 cents report for those out days because of snow in Q1....
I don't see why Q1 would be much worse than Q4. In Q4, there weren't any non-recurring items included. The only thing non-recuring O'Brian mentioned in CC was their fuel margin. But in Q1, it was quite good so far, and looks getting better for the rest of March. It will stay around 22~27 cents for awhile unless the oil shoots up above $80.
Fuel margin corelates with crack spread. I have noticed the crack spread behaved as I said about fuel margin: went down to Jan, then went back up. Another circumstantial evidence of my claim is that casy's fuel margin. They reported for the quarter ending Jan 31 instead of Dec 31. CASY's fuel margin was 22 cents where as all others (such as CST) who reported for Dec 31 had higher margins around 25 cents.
They say the fuel marging is usually higher when oil drops and lower when oil goes up. But that is not all. Overall economy and willingness to pay.....
If you don't have access to a crack spread chart, look at the charts of refiners such as TSO, VLO, ALJ, WNR, or ALDW. Drop to mid January then bounce back up even higher than December. By the way, these are pure refiners.
I don't know what will happen to fuel margin for the rest of the year but for Q1, it seems that it was quite high, not like 11 cents as we had last year
Agree to landshannen and bwisheldon except one. The fuel margin is about the same in Q1. Fuel margin was down in late January but it went back up for last 30 days or so. For Q1, it probably is about 25 cents.
When methanol blending is done for the summer, it might go down a bit due to the cost of methanol, but even with that, as long as crude go back up above $80 and gasoline above $3.50, fuel margin will stay around 25 cents.
Revenue reduced because the fuel was cheaper. A million gallon more was sold but at much less price. The FUEL MARGIN was 27 cents per gallon. I knew the fuel margin would be good but 27 cents, wow.
My 15 dollar call options will be in the money today.
In all, TA is buying 26 more stores not 36. Usually an acquistion of this size is paid without dilution. But that was my thought last time and got burnt. Nontheless, it is a good move for the long run. Plus, TA suppose to have more money than before. (ie. far less likely for another dilution)
Fuel sale is lucrative these days. If fuel margin stays above 20 cents per gallon, ...
Sentiment: Strong Buy
I think for now, the news has negative effect on TA pps because the last experience: i.e. dilution. In the long run, the purchase should be positive for TA's bottom line as well as top. But I am afraid it may look Portnoy taking all honey and cream only for himself. If TA tanks like last time when they bought gas stations by dilution, it will be a buying oportunity.
By the way, it appears that TA bought 6 gas station/convenient stores in Kentuky last month. (google "TA picks up six Cheers Food & Fuel locations in Kentucky") That is 36 more stores all together.
Speaking of TA making big mistakes, gosh they screwed everybody big time several times. Then again TA made us big money a few time.
Casey reported about 10 hours ago, their fuel margin until Jan 31 was 22 cents a gallon; little bit lower than other fuel distributors. I think TA had about 25 cents a gallon.
Good luck to all
Yes, TA was doing exactly Glass is asking. Selling asset at a low price to HPT, and pay a ridiculously high rent. At some point, HPT and portnoy were getting like 20 percent a year on their money. Mr. Glass is not advocating exactly except the price and the rent.
I am sure Mr. Glass know better then you and I about how shaking things up is done. If he shakes Piortnoy et al, Portnoy loses, and his loss is TA shareholders' gain.
Sentiment: Strong Buy
A funny quote of Russell Glass from an old NY Times article.
Mr. Glass says that he seeks companies with high cash flow from operations and undervalued assets like real estate, as well as boards that he believes need A KICK IN THE PANTS.
Does TA fit right on the description?
Thanks for your reply bwisheldon.
Strohecker did not reply my email yet. I guess she likes you better than me. :) I am quite releaved because that we will have earnings report before Mar 20.
I will definitely read HPT report carefully but I only expect to see the rent. If you find anytthing, please let us know.
One odd thing: we did not have any huge volume today despite the activist news. And yet price went up quite a bit anyway.
Delek reported. Retail segment's Fuel margin during 2014 Q4 was $0.238 per gallon compare to $0.142 during 2013 Q4. Almost 10 cents more per gallon. Murphy USA had simila fuel margin: almost 25 cents. Why TA would not have ten cents more per gallon? Wouldn't that alone add 20~30 cents more to the net income? Plus, the big gas margin seems to stay for awhile.
My $15 calls will be in the money though I am very nervous right now. Why TA tanked? Looking at the chart and Bollinger bands, I think TA seems about to drop to the half again. What could cause such drop however?
Delek (DK) is reporting tomorrow after the market close. Interesting to see their fuel margins.
By the way, just in case anybody bought RUSL as an oil play, I am getting out tomorrow morning. Double in two weeks is a bit ...
It is usual that annual reports take a bit more time than QR. I would say that TA typically reports betweem late Feb and early Mar, sometimes even mid march. I really hope that they report before options expire on Mar 20. If they don't, I am screwed this time.
Hospitality is estimated to report in the last week of February but that is yahoo estimate which never to be trusted and more often wrong than not.
Maybe that explains the recent south west move of TA pps. The Bollinger band makes me nervous.
* Chain restaurants recorded their strongest pace of same-store sales in six years during January at 6.1%, according to data from Black Box Intelligence.
* An easier weather compare, $2 gas, and a more stable economic backdrop were factors.
* Traffic was up 2.4% during the month.
* The sales lift was delivered without much help from McDonald's which saw a marginal +0.4% comp gain.
* Comp sales in the Midwest improved 11.2% after the region had a much easier time with weather during January than a year ago.
* Chains with a large focus in the Midwest include Steak 'n Shake (NYSE:BH), Jimmy John's, Culvers, and Bob Evans (NASDAQ:BOBE)."""
Sounds good to me. Low gas price, high fuel margin, the very bullish retail sector, and now this sharp increase in restaurant sales.... smell money in TA.
Sentiment: Strong Buy