I only ask this because I see the multiples that CAPL, MPLX etc are getting. The market is clearly rewarding MLP structures due to investors' desire to own high yielding assets. If I take a look at the multiples at CAPL and MPLX:
CAPL trades at 22.9 EV/TTM EBITDA
MPLX trades at 28.8 EV/TTM EBITDA
MPC (parent company) has risen 139% from the date of the announced carve-out of its midstream business through the creation of an MLP (vs a 42% rise in the S&P 500). These returns are hard to ignore.
When I compare these multiples to TA and HPT it makes me wonder if there is an opportunity to the do the same here. It appears that it would reward both entities well. At a time when the entire world is yield hungry maybe it makes sense to consider this, if possible???
I know some of the discount is related to not owning as many properties...I think they own about 15% of the travel centers and another 30+ convenience stores / gas stations and lease the rest. However, there's something to be said for being good operators and having someone else (HPT) shoulder the debt burden. They have lower leverage which will be helpful during downturns but they are also able to acquire more properties faster than their debt laden peers (Flying Pilot and Loves).
I also really like their exposure to QSRs and Full Service restaurants, two segments that are positively impacted by lower gas prices. QSRs are a great business to be in longer term.
I wouldn't be surprised to see a $20+ price this year. I expect them to do about $1 EPS this year and grow it about 10 to 15% per year.
Does anyone have a rough estimate for maintenance capex on a "normalized" basis? Its tough to determine how much of the capex allocated to upgrading new facilities occurred over the past few years. I'm trying to calculate accurate estimates for FCF going forward.
On a side note, TA doesn't get much credit for its turnaround in ops. I know some of you guys have been here for a while and are accustomed to lower multiples in general for this stock but the discount they get to their peers is pretty high. Market Cap / TTM EBITDA
Based on Mkt Cap to EBITDA, TA is 39% undervalued vs its peers. Based on EV to EBITDA it is 26% undervalued. Blended its 33% undervalued which requires a 50% upside move from today's close to close the gap. That equates to a $20 price target. (Note I didn't include ANCUF in this group because its multiples are significantly higher and would make the discount seem more. Also there are others that are MLP's like CAPL and MPLX that have really high multiples presumably because of their tax structure).
sorry last thing...if you look at the M&A in the space between PTRY, CAPL, LPG, SUSS, Hess, etc, they were all done at significantly higher multiples. Some of the discount has to do with RMR / HPT thwarting any takeover possibility but I don't think that's warranted. If someone came to the table with the right price they would listen. If not and TA has to stand on its own then this is easily the best operating environment it has ever had as a public company.
I mean I get the concern and I think people have become accustomed to trading this stock in ranges, but this has broken out above its long term ceiling of $12.50 on significant fundamental reasons. The tailwind they are now getting theoretically could last for years. Oil stayed low for all of the 90's essentially. If that happens this decade TA could do extremely well.
Impossible to figure out the short term direction; however, it is trading at about 13 times EPS for the past few years and that was when oil was significantly higher and when they had a smaller footprint. They're expanding fairly aggressively. Can they do $2 EPS within the next 2 years and trade at 13 x or $26? Sure, why not?
TA is in the wheelhouse of lower oil. It's the number one beneficiary, operating 500+ quick service and full service restaurants and having higher fuel margins. Plus the economy is doing fine which means more traveling / trucking business.
Gotta wonder if HPT / Portnoys would look to monetize TA. This space is red hot right now. Valuation on TA is still really low at 11X EPS, 5X FCF run rate from last quarter, and 3X EBITDA run rate from past 2 quarters. Those are all exceedingly below competitors.