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On Thursday, Stifel analysts downgraded Arko stock from Buy to Hold, adjusting the price target to $7.50 from the previous $8.50. This decision followed Arko’s fourth-quarter 2024 earnings report, which showed both adjusted EBITDA and revenue figures falling short of consensus expectations. Currently trading at $7.26, with a market capitalization of $840.5 million, InvestingPro data shows Arko trading at a relatively high P/E multiple of 45.6x, while revenue declined 4.13% in the last twelve months.
Arko provided its initial 2025 adjusted EBITDA guidance, suggesting a range of $233 million to $253 million, which is below the consensus estimate of $249.9 million. The company’s guidance for the first quarter of 2025 indicates an adjusted EBITDA between $27 million and $33 million, notably lower than the expected $39.7 million. Despite these projections, Arko anticipates an acceleration in fuel margin throughout 2025. InvestingPro analysis reveals that while management has been actively buying back shares, net income is expected to decrease this year. Get access to 5 more exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.
The company’s recent performance highlighted challenges in same store merchandise sales and same store fuel volume, which saw declines of 4.3% and 4.4% respectively. These figures were reported to be weaker than those of Arko’s peers. In response to these challenges, Arko is concentrating on channel optimization, which includes converting less productive retail stores to dealer sites. Throughout the past year, the company converted 153 retail stores and expects to convert approximately 100 more in 2025. These changes are predicted to generate an annualized benefit exceeding $20 million upon completion. According to InvestingPro, the company maintains strong liquidity with a current ratio of 1.63, indicating sufficient resources to support its transformation efforts.
Stifel’s analysts noted that while they expect trends to improve for Arko, they also foresee continued volatility due to macroeconomic uncertainty and the company’s ongoing business transformation. Given the lack of near-term catalysts, the downgrade to a Hold rating reflects a more cautious outlook on the stock’s immediate potential. Dive deeper into Arko’s financial health and growth prospects with a detailed Pro Research Report, available exclusively through InvestingPro’s comprehensive analysis of 1,400+ US equities.
In other recent news, Arko Corp (NASDAQ:ARKO) reported financial results for the fourth quarter of 2024, revealing a shortfall in both earnings and revenue expectations. The company posted an earnings per share (EPS) of -$0.03, missing the forecasted $0.02, while revenue came in at $1.99 billion, below the expected $2.27 billion. Despite these misses, Arko’s stock remained stable in aftermarket trading. The company’s adjusted EBITDA for the quarter was $56.8 million, down from $61.8 million in the same period the previous year. Analysts have noted that the company’s net income also declined to $20.8 million from $34.6 million in 2023, reflecting challenges in a tough macroeconomic environment. Looking ahead, Arko projects its total company adjusted EBITDA for 2025 to be between $233 million and $253 million. Arko is focusing on mid-single-digit growth in its wholesale segment and high single to low double-digit growth in its fleet segment. The company is also implementing strategic initiatives to optimize its retail footprint, which may include potential large acquisitions, as hinted during the earnings call.
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