Momentum Stock Watch: Core-Mark Holding Company, Inc. (CORE)

Company Profile:

Core-Mark Holding Company, Inc. markets fresh and broad-line supply solutions to the convenience retail industry. The company distributes various products, including cigarettes, other tobacco products, candies, snacks, fast food, groceries, fresh products, dairy, bread, beverages, general merchandise, and health and beauty care products, as well as offers marketing programs and technology solutions. Its customers include traditional convenience store, such as national and super-regional convenience store operators, as well as independently owned convenience stores; and alternative outlets, which include grocery stores, drug stores, liquor stores, cigarette and tobacco shops, hotel gift shops, military exchanges, college and corporate campuses, casinos, hardware stores, airport concessions, and other specialty and small format stores that carry convenience products. The company offers its products to 36,500 customer locations through a network of 28 distribution centers in the United States and Canada. Core-Mark Holding Company, Inc. was founded in 1888 and is headquartered in South San Francisco, California.

Recent News:

On Feb.25, 2016, the company announced financial results for the fourth quarter and year ended December 31, 2015. Net sales increased 7.9% to $2.8 billion for the fourth quarter of 2015 compared to $2.6 billion for the same period in 2014. Net income for the fourth quarter of 2015 was $17.7 million compared to $14.6 million for the same period in 2014.

It has entered into a seventh amendment to its credit facility, which matures in May 2020. The amendment increases the size of its credit facility from $200 million to $300 million. The amendment also includes an expansion feature to give Core-Mark the option to further increase the size of the credit facility by an additional $100 million to a total of $400 million if exercised.

They have signed a five year supply agreement to service approximately 900 7-Eleven stores in three western regions. Core-Mark will be the primary wholesale distributor delivering a wide range of products to these stores out of three of its divisions — Las Vegas, NV, Salt Lake City, UT and Sacramento, CA. The anticipated start date for service under this agreement is October 2016.

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

CORE’s strengths can be seen in its better growth and strong efficiency compared with its peers. Its revenue and net income have increased over several years. Technical indicators signal the bullish signs, as there is a bullish cross in MACD and Stochastic Oscillator. RSI is increasing to 49.90. The current P/BV ratio indicates it is undervalued compared to the average P/BV ratio of the industry and the sector. We rate Core-Mark Holding Company, Inc. (CORE) a Strong BUY.