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Opinions Steve Belisle
Parkland Fuel CorpPKI.TOWATCHMay 18, 2016
Steve BelisleStock price when the opinion was issued
As of Nov 04, 2025. Market Open.
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Premium contentWe reiterate PKI as a TOP PICK. It trades at 18x earnings, 2.5x book and supports a 15% ROE -- healthy for a retailer. It has secured low cost government funding to expand its EV charging infrastructure in BC. We like that cash reserves are growing, which is allowing them to continue to retire previous debt. We recommend trailing up the stop (from $38) to $41, looking to achieve $53 -- upside potential of 19%. Yield 3.0%
(Analysts’ price target is $52.31)
Premium contentPKI has acquired attractive financing from the Canadian Infrastructure Bank to expand its EV charging network in western Canada. It trades at 17x earnings, 2.4x book and supports a 15% ROE and we like that cash reserves are growing with good cash flow from operations. Its dividend is supported by a payout ratio under 55% of cash flow. We recommend a stop-loss at $38, looking to achieve $52 -- upside potential of 16%. Yield 3.0%
(Analysts’ price target is $51.77)Well-run. The refinery enjoys good margins. Gas stations work in underserved areas. Likes them.
David Baskin
Acquisition spree, and debt got out of control. Renewed focus on paying down debt. Serial dividend grower. Attractive valuation, but it's a show-me story. If you believe Canada's population is growing and needs to get around, should do well. Great international division. He has a small position, great business, he's not selling.
Barry SchwartzEPS of $0.64 beat estimates of $0.2553 and revenues of $8.16B missed expectations of $8.22B. Sales grew by 7% for the year, driven by large advancements in its International segment. Net profit margins expanded slightly from the previous quarter, and it generated $201M in free cash flows, which were mostly used for repaying debt and paying dividends. Management is confident that it can achieve $2B in Adjusted EBITDA by 2025 without additional acquisitions and while reducing leverage. These were good results and the market is reacting well so far.
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They're different, because ATD is retail and convenience stores, whereas PKI that's only half their business, as well as selling energy products to companies and their BC refinery (25% of their business). Also, different analysts cover each company. The refineries tend to get a lower PE and are less ESG-friendly, and are in a heavier-asset industry. Is less stable than ATD. ATD also has Circle K's not necessarily attached to their gas stations, whereas they are attached under PKI. PKI's balance sheet is more leveraged, too. She owns neither company.
This has been stuck in a range lately. There were some concerns about fuel volumes in Western Canada, and also in North Dakota where they have a growing business. Recently made a nice acquisition of some fuel stations from Imperial Oil (IMO-T). They are becoming more of a retail fuel station operator, than a wholesale reseller of fuel. That should gather a higher multiple. You may see an acquisition in the next few months, that will probably come with an equity issue. That would be a great way to increase your position. Dividend yield of 5% is fairly sustainable.