Friday, April 8, 2016

Seeking Alpha: Core-Mark Holding Delivering To Customers And Shareholders

While Core-Mark (NASDAQ:CORE) has had some operational challenges, this leading convenience store-focused distribution company has continued to execute well on balance and expand its addressable market. With the shares up about 25% from my last update and up about 115% from my first article (versus a 14% improvement in the S&P 500), it's hard to say that the company's progress has not been suitably rewarded by the Street.

This year (2016) should be a big one for Core-Mark as it begins to service new agreements with Murphy USA (NYSE:MUSA) and 7-Eleven, and I wouldn't rule out the possibility of an acquisition that expands the company's distribution capabilities in either the Midwest or the Southeast (if not both). The "but" here is valuation - the shares trade at around 13x the average sell-side estimate for 2016 EBITDA, and it takes some pretty significant margin improvement assumptions to drive a significantly higher fair value from here.

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Core-Mark Holding Delivering To Customers And Shareholders

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