Why TravelCenters of America (TA) Stock Is Gaining This Morning

NEW YORK (TheStreet) --Shares of TravelCenters of America LLC (TA) are higher by 9.82% to $8.95 on Monday after the company announced adjusted earnings (EBITDAR) for the 2013 fourth quarter, which ended on Dec. 31, 2013,  increased 3.9% to $68.2 million, from $65.6 million from the year ago period.

The company, which operates and franchises travel centers along the U.S. interstate highway system, reported a net income of $12 million, or 39 cents per share, versus a net loss of -$2.5 million, or -8 cents per share for the 2012 fourth quarter.

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Separately, TheStreet Ratings team rates TRAVELCENTERS OF AMERICA LLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TRAVELCENTERS OF AMERICA LLC (TA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TA's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.52, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.81 is weak.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has decreased by 16.8% when compared to the same quarter one year ago, dropping from $18.99 million to $15.80 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, TRAVELCENTERS OF AMERICA LLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: TA Ratings Report
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