Global Partners LP (GLP, Financial) recently exhibited a daily gain of 6.2% and has shown an impressive three-month gain of 26.12%. With an Earnings Per Share (EPS) of 3.89, investors are considering whether the stock is modestly overvalued. This article delves into a valuation analysis to provide insights into Global Partners LP's current market standing. Continue reading for an in-depth examination of its intrinsic value and future prospects.
Company Introduction
Global Partners LP is a US-based limited partnership specializing in midstream logistics and marketing, particularly in the purchase, sale, storage, and transportation of petroleum and related products. With a network of terminals across various states including Massachusetts and Maine, Global Partners LP operates in segments such as Wholesale, Gasoline Distribution and Station Operations, and Commercial. The company has recently been trading at $39.74 per share, with a market cap of $1.30 billion, prompting investors to question whether the stock price fairly reflects the company's GF Value, estimated at $32.56.
Summarize GF Value
The GF Value is an exclusive metric that determines the intrinsic value of a stock by considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line suggests the ideal fair trading value for the stock. If a stock trades significantly above this line, it may be overvalued, which could lead to poor future returns. Conversely, trading below the line indicates potential for higher returns. Currently, Global Partners LP's stock price suggests it is modestly overvalued, which could imply a lower long-term return compared to the company's business growth.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Investors must consider a company's financial strength to avoid the risk of permanent capital loss. Indicators like the cash-to-debt ratio and interest coverage can provide insights into financial stability. Global Partners LP has a cash-to-debt ratio of 0.01, ranking lower than 96.03% of its industry peers. With an overall financial strength rating of 6 out of 10, the company's financial condition is deemed fair.
Profitability and Growth
Investing in profitable companies, especially those with consistent long-term profitability, is generally less risky. Global Partners LP has been profitable for 9 out of the past 10 years. With a revenue of $16.50 billion and an Earnings Per Share (EPS) of $3.89, its operating margin stands at 1.46%. Although this ranks below many of its competitors, the company's profitability score is a solid 7 out of 10. Growth is also a vital component of valuation, and Global Partners LP's 3-year average annual revenue growth rate is 13.3%, indicating its potential for creating shareholder value.
ROIC vs WACC
Evaluating a company's profitability can also be done by comparing the Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC). Global Partners LP's ROIC over the past 12 months is 9.89, surpassing its WACC of 7.77, which suggests the company is effectively creating value for its shareholders.
Conclusion
In summary, Global Partners LP (GLP, Financial) appears to be modestly overvalued based on current market prices. The company maintains fair financial health and profitability, with growth rates that outperform a significant portion of its industry. For a more comprehensive understanding of Global Partners LP's financials, interested parties are encouraged to review the company's 30-Year Financials here.
Discover High-Quality Investments
To explore high-quality companies that may deliver above-average returns, consider the GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
