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How Financially Strong Is TravelCenters of America LLC (TA)?

Andrew Edmonds

TravelCenters of America LLC (NASDAQ:TA) is a small-cap stock with a market capitalization of $183.75M. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. Why is it important? Specialty Retail businesses operating in the environment facing headwinds from current disruption, even ones that are profitable, are more likely to be higher risk. So, understanding the company’s financial health becomes crucial. I believe these basic checks tell most of the story you need to know. Though, since I only look at basic financial figures, I’d encourage you to dig deeper yourself into TA here.

Does TA generate enough cash through operations?

TA’s debt level has been constant at around $340.4M over the previous year comprising of short- and long-term debt. At this constant level of debt, the current cash and short-term investment levels stands at $61.3M , ready to deploy into the business. Additionally, TA has produced cash from operations of $110.8M in the last twelve months, leading to an operating cash to total debt ratio of 0.33x, meaning that TA’s current level of operating cash is high enough to cover debt. This ratio can also be interpreted as a measure of efficiency as an alternative to return on assets. In TA’s case, it is able to generate 0.33x cash from its debt capital.

Can TA meet its short-term obligations with the cash in hand?

At the current liabilities level of $330.3M liabilities, it appears that the company has been able to meet these commitments with a current assets level of $402.1M, leading to a 1.22x current account ratio. Generally, for specialty retail companies, this is a reasonable ratio since there is a bit of a cash buffer without leaving too much capital in a low-return environment.

NasdaqGS:TA Historical Debt Dec 7th 17

Can TA service its debt comfortably?

With a debt-to-equity ratio of 58.42%, TA can be considered as an above-average leveraged company. This is not uncommon for a small-cap company given that debt tends to be lower-cost and at times, more accessible.

Next Steps:

Are you a shareholder? At its current level of cash flow coverage, TA has room for improvement to better cushion for events which may require debt repayment. Though, the company will be able to pay all of its upcoming liabilities from its current short-term assets. Given that TA’s financial situation may change. I suggest keeping abreast of market expectations for TA’s future growth on our free analysis platform.

Are you a potential investor? Although short-term liquidity isn’t an issue, TA’s high debt levels on top of poor cash coverage may not be what you’re after in an investment. But, keep in mind that this is a point-in-time analysis, and today’s performance may not be representative of TA’s track record. I encourage you to continue your research by taking a look at TA’s past performance analysis on our free platform to conclude on TA’s financial health.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.