MEMPHIS, Tenn. --Over the three months ending June 2014, median stock market pricing for the convenience store and fast-food indexes was up 5.7% and 3.3%, respectively, outperforming the Russell 2000 index's increase of 1.7%, according to full-service business valuation and financial advisory firm Mercer Capital.
A portion of the increase in the convenience store index is attributable to the increase of the market price of Susser Holdings Corp., Corpus Christi, Texas, after Energy Transfer Partners LP (ETP), Dallas, the owner of the Sunoco gas station network in the eastern United States, announced in April its intentions to purchase the operator of the Stripes and Sac-N-Pac c-store chains for $1.8 billion, reflecting a 41% premium over Susser's closing stock price on April 25, largely driven by $70 million in operational efficiencies. The deal closed in late August.
The Mercer Capital retail grocery index was down 1.8% in the first quarter.
EBITDA multiples were up for convenience stores but down for grocery stores and fast-food operators. Multiples for public convenience store operators increased from 9.0x EBITDA at the end of first-quarter 2014 to 9.6x at the end of second-quarter 2014. EBITDA multiples were at their highest levels for the five-year period ended second-quarter 2014.
Valuations for grocery store and public fast-food companies retreated a half to a full turn on EBITDA. During 2013, comparable EBITDA multiples for the c-store index ranged from 8.0x to 8.8x EBITDA. At year-end 2012, the median c-store multiple was 7.8.
Margins
Nationwide retail gasoline margins ended the quarter at 19.5 cents per gallon, up from 15.4 cents per gallon in the last week of the first quarter, and above the historical five-year average.
Retail fuel margins have continued to rise, and margins at the end of July were 54% higher than the prior year. Retail diesel prices are also quite low, and diesel margins have continued to rally, ending the quarter at 26.6 cents per gallon.
Fuel margins have been consistent on an annual basis, averaging 17.1 cents per gallon for 2009 through 2013.
Click here to view the full report, including a review of recent M&A activity.
Memphis, Tenn.-based Mercer Capital provides the convenience store industry with corporate valuation, financial reporting, transaction advisory and related services. It also serves the grocery store, quick-service restaurant (QSR) and travel center industries.
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