Core-Mark Posts Blowout Quarter; Shares Jump 11%

Shares of Core-Mark Holding Company gained 10.7% on Monday after delivering impressive 4Q results. The company, which distributes packaged consumer products, also provided better-than-expected earnings and revenue guidance for 2021.

Core-Mark (CORE) reported 4Q revenues of $4.3 billion, which grew 2.3% year-over-year and topped Street estimates of about $3.4 billion. While cigarette sales increased 4.6% year-over-year, non-cigarette sales declined 1.8% in the quarter and sales of other tobacco products grew 9.2%.

The company delivered 4Q adjusted earnings of $0.57 per share, which exceeded consensus estimates of $0.31 per share and increased about 27% from the year-ago period. Adjusted EBITDA grew 14.1% year-over-year to $55.1 million.

During the quarter, the company’s board approved a new share buyback plan of $375 million over a three-year period to replace an earlier $60 million stock repurchase program. Along with the share buyback, Core-Mark announced a cash dividend of $0.13 per share, which will be paid on March 26 to shareholders of record as of March 15. The annual dividend of $0.52 per share reflects a dividend yield of 1.4%.

As for 2021, the company forecasts adjusted EPS in the range of $1.90-$2.06, higher than consensus estimates of $1.88 per share. Core-Mark expects to generate revenues in the range of $17.2-17.5 billion for 2021, versus analysts’ forecasts of about $17.1 billion. (See Core-Mark Holding stock analysis on TipRanks).

Following the stellar results, Raymond James analyst Bobby Griffin raised the stock’s price target to $42 (16% upside potential) from $34, and maintained a Buy rating. In a note to investors, Griffin said, “the sales recovery trajectory continues to improve in both C-Store and non-C-Store channels, and non-cigarette sales (higher GM) should improve further as the vaccine rollout continues and vehicle miles traveled slowly recovers in 2021.”

Overall, the rest of the Street has a cautiously optimistic outlook on the stock with a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average analyst price target of $39 implies upside potential of about 8% to current levels. Shares have gained around 60% over the past year.

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