ARKO Corp (ARKO) AI Stock Analysis

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ARKO Corp

(NASDAQ:ARKO)

54Neutral

ARKO Corp's overall stock score reflects a challenging environment with weak technical indicators and high valuation concerns. Financial performance is stable but impacted by declining revenue and profitability. The earnings call highlighted mixed results, with strategic initiatives aimed at long-term growth facing immediate challenges. Investors should watch for improvements in sales trends and cash flow generation to enhance the stock's attractiveness.

Positive Factors

Dealerization Strategy

ARKO's dealerization strategy is expected to bring more than $20 million in annualized benefits.

Expense Management

Merchandise and fuel profitability exceeded expectations due to better expense management.

Negative Factors

Sales Performance

Same-store merchandise sales and fuel gallons declined, missing expectations.

Strategy Visibility

Lack of visibility from ARKO's continually evolving strategy justifies continued caution.

Valuation Concerns

There is a risk that ARKO's valuation remains subdued relative to peers if volumes, particularly retail fuel volumes and same-store merchandise sales, remain weaker than peers and industry data.

ARKO Corp (ARKO) vs. S&P 500 (SPY)

Market Cap

$466.56M

Dividend Yield3.29%

Average Volume (3M)1.06M

Price to Earnings (P/E)31.2

Beta (1Y)1.05

Revenue Growth-7.23%

EPS Growth-45.76%

CountryUS

Employees11,772

SectorConsumer Cyclical

Sector Strength55

IndustrySpecialty Retail

Share Statistics

EPS (TTM)0.13

Shares Outstanding115,771,320

10 Day Avg. Volume724,563

30 Day Avg. Volume1,059,477

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.05

Price to Cash Flow (P/CF)5.30

P/FCF Ratio2.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$6.00

Price Target Upside48.88% Upside

Rating ConsensusHold

Number of Analyst Covering2

ARKO Corp Business Overview & Revenue Model

Company DescriptionARKO Corp is a prominent player in the retail convenience store sector, primarily operating through its subsidiary, GPM Investments, LLC. The company manages a wide network of convenience stores and gas stations across the United States, focusing on providing customers with essential products and services such as fuel, food, beverages, and other convenience items. ARKO's strategic acquisitions and partnerships have helped expand its footprint, reinforcing its position in the convenience retail market.

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

Positive

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

Positive

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.

Cash Flow

Neutral

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Negative

Last Price4.03

Price Trends

50DMA

5.22

Negative

100DMA

5.99

Negative

200DMA

6.20

Negative

Market Momentum

MACD

-0.43

Negative

RSI

33.64

Neutral

STOCH

37.65

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARKO, the sentiment is Negative. The current price of 4.03 is above the 20-day moving average (MA) of 3.99, below the 50-day MA of 5.22, and below the 200-day MA of 6.20, indicating a bearish trend. The MACD of -0.43 indicates Negative momentum. The RSI at 33.64 is Neutral, neither overbought nor oversold. The STOCH value of 37.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXL	62 Neutral	$409.43M	12.03	5.79%	―	0.75%	―
MYE	59 Neutral	$375.20M	52.26	2.53%	5.64%	2.86%	-85.38%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%
ARKO	54 Neutral	$466.56M	31.22	5.54%	3.29%	-7.23%	-45.76%
MNRO	51 Neutral	$464.81M	26.27	3.02%	7.75%	-5.25%	-42.25%
PACK	51 Neutral	$330.99M	―	-3.34%	―	9.69%	31.57%
DADA	49 Neutral	$484.64M	―	-44.36%	―	-13.54%	-3.33%

* Consumer Cyclical Sector Average

Performance Comparison

ARKO

ARKO Corp

4.03

-0.69

-14.62%

AXL

American Axle

3.12

-4.13

-56.97%

MNRO

Monro Muffler

14.96

-14.14

-48.59%

MYE

Myers Industries

9.36

-11.54

-55.22%

PACK

Ranpak Holdings

3.80

-3.77

-49.80%

DADA

Dada Nexus

1.88

-0.18

-8.74%

ARKO Corp Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -44.11% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a mixed outlook for ARKO Corp. While there were notable achievements, such as progress in the dealerization program and improvements in OTP gross margins, the company faced challenges with declining same store sales, reduced adjusted EBITDA, and a net loss for the quarter. The introduction of the Fueling America's Future campaign aims to counter these challenges by boosting store traffic and fuel sales.

Highlights

Loyalty Program Success

Enrolled loyalty members spent an average of $104 per month, nearly 60% more than non-enrolled customers, and visited stores about three more times per month.

Dealerization Program Progress

ARKO converted more than 150 retail stores to dealer sites in 2024, exceeding their initial conversion goal, with plans to convert approximately 100 more stores by the end of Q1 2025.

OTP Gross Margin Improvement

The OTP category saw a 200 basis points improvement in gross margin during Q4 2024, further increasing the gap between higher-margin OTP and traditional cigarettes.

Fueling America's Future Campaign

Launched a campaign allowing customers to earn up to $2 off per gallon for up to 20 gallons with in-store purchases, aimed at increasing store traffic and fuel sales.

Lowlights

Decline in Adjusted EBITDA

Total company adjusted EBITDA was $56.8 million for Q4 2024, down from $61.8 million in the same period in 2023, primarily due to lower retail fuel and merchandise contribution.

Same Store Sales and Fuel Volume Decline

Same store merchandise sales were down 2.1% for Q4 2024, while same store fuel gallon demand decreased by 4.4%.

Net Loss for the Quarter

Reported a net loss of $2.3 million for Q4 2024 compared to a net income of $1.1 million in the same period in 2023.

First Quarter 2025 Guidance Indicating Decline

Guidance for Q1 2025 adjusted EBITDA is $27 million to $33 million, reflecting continued negative same store trends and adverse weather impacts.

Company Guidance

During the ARKO Corp. fourth-quarter and full-year 2024 earnings call, the company provided guidance for 2025, expecting total company adjusted EBITDA between $233 million and $253 million, reflecting a slight decrease from 2024's $248.9 million. The retail fuel margin is projected to be between $0.395 and $0.415 per gallon, with mid-teen percent operating profit growth anticipated for the wholesale segment. The dealerization program is expected to generate an annualized benefit exceeding $20 million in combined wholesale and retail segment operating income. Despite a decline in same-store retail fuel gallons, fuel margin resilience and strategic initiatives, like the Fueling America’s Future campaign, aim to enhance customer engagement and boost store traffic. Additionally, ARKO plans to continue optimizing its portfolio by converting select retail stores to dealer sites, which is expected to be accretive over time.

ARKO Corp Corporate Events

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.