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ARKO Corp (ARKO)
NASDAQ:ARKO
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ARKO Corp
(NASDAQ:ARKO)
59Neutral
Positive Factors
Dealerization Strategy
ARKO's dealerization strategy is expected to generate over $20 million in annualized benefits.
Expense Management
Merchandise and fuel profitability exceeded expectations due to better expense management.
Negative Factors
Investment Risks
There is a risk that more drastic pricing, margin, and foodservice investments are needed.
Strategy Visibility
Lack of visibility from ARKO's continually evolving strategy justifies continued caution.
Valuation Concerns
ARKO's valuation may remain subdued relative to peers if retail fuel volumes and same-store merchandise sales are weaker.
ARKO Corp (ARKO) vs. S&P 500 (SPY)
Market Cap
$471.34M
Dividend Yield2.9%
Average Volume (3M)581.24K
Price to Earnings (P/E)32.0
Beta (1Y)1.07
Revenue Growth-7.23%
EPS Growth-45.76%
CountryUS
Employees11,772
SectorConsumer Cyclical
Sector Strength58
IndustrySpecialty Retail
Share Statistics
EPS (TTM)-0.12
Shares Outstanding114,680,084
10 Day Avg. Volume439,464
30 Day Avg. Volume581,237
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap6.68
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit7.93
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$6.13Price Target Upside37.75% Upside
Rating ConsensusHold
Number of Analyst Covering4
ARKO Corp Business Overview & Revenue Model
Company DescriptionArko Corp. operates convenience stores in the United States. It operates through three segments: Retail, Wholesale, and GPM Petroleum. The Retail segment engages in the sale of fuel and merchandise to retail consumers. The Wholesale segment supplies fuel to third-party dealers and consignment agents. The GPM Petroleum segment supplies fuel to independent dealers, and bulk and spot purchasers. It operates approximately 3,000 locations comprising approximately 1,400 company-operated stores and approximately 1,650 dealer sites. The company is based in Richmond, Virginia.
How the Company Makes MoneyARKO Corp generates revenue primarily through its extensive network of convenience stores and gas stations. The company earns money by selling fuel, which constitutes a significant portion of its income, and through the sale of convenience items such as snacks, beverages, and other everyday products. Additionally, ARKO benefits from partnerships and supplier agreements that allow it to offer a diverse range of products at competitive prices. The company's revenue model is also supported by strategic acquisitions that enhance its market presence and operational efficiencies, contributing to its overall earnings.
ARKO Corp Financial Statement Overview
Summary
ARKO Corp demonstrates a stable financial position with effective cost management, but faces challenges in revenue growth and profitability. The balance sheet is solid with low leverage, but cash flow generation needs improvement. Overall, the company is well-positioned financially but must address growth and cash flow concerns to enhance shareholder value.Income Statement
ARKO Corp shows a solid gross profit margin of 100% for 2024, driven by efficient cost management. The net profit margin is relatively low at 0.38%, indicating limited profitability. Revenue growth is negative, with a decline of 7.24% from 2023 to 2024, reflecting challenges in maintaining sales momentum. EBIT and EBITDA margins are modest, at 1.08% and 0.70% respectively, suggesting room for operational efficiency improvements.―
Balance Sheet
The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.31, indicating prudent financial leverage. Return on equity stands at 11.92%, showcasing decent returns for shareholders. The equity ratio is 7.65%, reflecting a stable capital structure but with potential for strengthening the equity base.72
Cash Flow
Free cash flow growth from 2023 to 2024 is negative, showcasing a challenge in cash generation. The operating cash flow to net income ratio is 0.63, indicating moderate cash conversion efficiency. Free cash flow to net income ratio is 0.63 as well, suggesting limited free cash flow relative to earnings.―
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.73B | 9.41B | 9.14B | 7.42B | 3.91B | Gross Profit |
| 397.22M | 423.63M | 418.55M | 367.48M | 258.36M | EBIT |
| 94.03M | 118.01M | 167.01M | 142.08M | 80.31M | EBITDA |
| 257.03M | 265.88M | 269.51M | 235.68M | 155.68M | Net Income Common Stockholders |
| 20.84M | 34.37M | 71.75M | 59.20M | 31.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 267.09M | 222.01M | 300.93M | 310.95M | 293.67M | Total Assets |
| 3.62B | 3.65B | 3.26B | 2.94B | 2.74B | Total Debt |
| 84.52M | 2.53B | 2.26B | 2.08B | 2.01B | Net Debt |
| -177.23M | 2.31B | 1.96B | 1.83B | 1.71B | Total Liabilities |
| 3.24B | 3.27B | 2.87B | 2.59B | 2.42B | Stockholders Equity |
| 276.87M | 376.10M | 380.83M | 353.45M | 318.04M |
| Cash Flow | Free Cash Flow | |||
| 20.86M | 24.89M | 110.48M | -67.26M | 129.17M | Operating Cash Flow |
| 20.86M | 136.09M | 209.26M | 159.19M | 173.84M | Investing Cash Flow |
| -2.68M | -296.82M | -175.49M | -171.78M | -407.55M | Financing Cash Flow |
| -22.94M | 85.36M | 10.55M | -26.38M | 491.05M |
ARKO Corp Technical Analysis
Neutral
4.45
Price Trends
4.07
Positive
5.47
Negative
6.02
Negative
Market Momentum
-0.02
Negative
60.37
Neutral
70.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARKO, the sentiment is Neutral. The current price of 4.45 is above the 20-day moving average (MA) of 4.13, above the 50-day MA of 4.07, and below the 200-day MA of 6.02, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 60.37 is Neutral, neither overbought nor oversold. The STOCH value of 70.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ARKO.
ARKO Corp Risk Analysis
ARKO Corp disclosed 31 risk factors in its most recent earnings report. ARKO Corp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ARKO Corp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $432.89M | 41.48 | 3.69% | 4.66% | 3.92% | -73.64% | |
65 Neutral | $491.09M | 23.63 | 3.40% | ― | -4.25% | ― | |
61 Neutral | $6.59B | 11.77 | 3.06% | 3.98% | 2.56% | -20.85% | |
59 Neutral | $471.34M | 31.99 | 5.54% | 2.90% | -7.23% | -45.76% | |
55 Neutral | $399.82M | 23.31 | 3.02% | 8.78% | -5.25% | -42.25% | |
49 Neutral | $513.15M | ― | -44.36% | ― | -13.54% | -3.33% | |
48 Neutral | $253.51M | ― | -3.89% | ― | 10.11% | 6.77% |
* Consumer Cyclical Sector Average
Performance Comparison
ARKO
ARKO Corp
4.45
-0.70
-13.59%
AXL
American Axle
4.33
-3.29
-43.18%
MNRO
Monro Muffler
12.76
-12.55
-49.59%
MYE
Myers Industries
12.12
-4.23
-25.87%
PACK
Ranpak Holdings
3.35
-3.35
-50.00%
DADA
Dada Nexus
2.00
0.12
6.38%
ARKO Corp Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 0.00%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. While there were significant achievements in the dealerization program, the Fueling America campaign, and loyalty program growth, challenges such as a decline in retail performance, severe weather costs, and an increased net loss were notable. The sentiment could be seen as neutral given the balance of positive strategic initiatives and financial challenges.Q1-2025 Updates
Positive Updates
Dealerization Program Progress
Arko converted 77 stores to its wholesale network and expects a cumulative annualized operating income benefit in excess of $20 million at full scale.
Fueling America's Future Campaign Success
The campaign increased average enrollment per day by 35%, gallons per transaction from 6.8 to 9.8, and the average basket size by 16%.
Loyalty Program Growth
Fast Rewards enrolled members spent 47% more and visited 2.5 times more per month than non-enrolled members, with loyalty members now accounting for 18.5% of OTP sales.
Wholesale and Fleet Segment Stability
These segments generated approximately $130 million in operating income over the past four quarters.
Fuel Margin Improvement
Fuel margin increased to $0.0379 per gallon, up $0.01 per gallon year over year.
Negative Updates
Decline in Retail Segment Performance
Retail segment contribution fell from $46.5 million to $40.2 million, with same-store merchandise sales down 6.9% and same-store fuel contribution down by $3.2 million.
Impact of Severe Weather
Severe weather led to a $1.7 million increase in operating costs for snow and ice removal and negatively impacted sales.
Increased Net Loss
Net loss for the quarter was $12.7 million compared to a net loss of $600,000 in the year-ago period.
Higher Interest and Financial Expenses
Net interest and other financial expenses increased to $13.9 million from $2.5 million in the year-ago period due to a prior year favorable settlement.
Company Guidance
During the Arko Corp. First Quarter 2025 Earnings Call, the company provided guidance for the upcoming quarters. They expect second-quarter total company adjusted EBITDA to range from $70 million to $80 million and maintain their full-year EBITDA guidance between $233 million and $253 million. Retail segment expectations include a Q2 average store count of about 1,300 sites, with merchandise sales per average store forecasted to be flat to up low single digits. Retail fuel margins are projected between $0.0425 and $0.0445 per gallon. Wholesale and fleet segments are anticipated to see mid to high single-digit operating income growth and modest increases, respectively. Despite macroeconomic challenges, they continue executing their transformation strategy, expecting dealerization to yield over $20 million in cumulative annualized operating income benefits, with 77 stores already converted and more in the pipeline.ARKO Corp Corporate Events
Business Operations and StrategyFinancial Disclosures
ARKO Corp Reports Q1 2025 Net Loss of $12.7M
Negative
May 8, 2025
In the first quarter of 2025, ARKO Corp. reported a net loss of $12.7 million, a decline in merchandise and fuel contributions, and an increase in merchandise margin. The company is advancing its transformation strategy by converting retail stores to dealer sites, remodeling stores, and expanding its store network, which is expected to enhance customer experience and drive long-term shareholder returns.
Spark’s Take on ARKO Stock
According to Spark, TipRanks’ AI Analyst, ARKO is a Neutral.
ARKO Corp’s stock score reflects strengths in financial stability and strategic initiatives like the dealerization program but is tempered by challenges in revenue growth, profitability, and same store sales declines. Valuation concerns with a high P/E ratio and mixed technical indicators further moderate the outlook. The company’s ability to effectively execute its transformation plan and improve cash flow generation will be critical for enhancing shareholder value.
To see Spark’s full report on ARKO stock, click here.
Business Operations and StrategyFinancial Disclosures
ARKO Corp Reports Q4 2024 Net Loss Amid Transformation
Negative
Feb 26, 2025
ARKO Corp reported a net loss of $2.3 million for the fourth quarter of 2024, compared to a net income of $1.1 million in the same period the previous year. The company is undergoing a transformation plan, converting retail stores to dealer sites, and expects this to yield significant operating income benefits. Despite challenges, ARKO is focusing on operational efficiencies and strategic investments in high-growth areas to drive sustainable long-term growth.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.