ARKO (ARKO) Stock Forecast & Price Target

ARKO Corp has demonstrated a solid performance in same-store merchandise sales, showing a growth of 5% on a four-year stack basis since 2019. Notably, the company achieved an impressive 15-16% growth in merchandise sales when excluding cigarettes, although it remains below the industry benchmark of approximately 25%. With a commitment to gross profit maximization and potential reacceleration of organic growth trends alongside strong operational data and investor sentiment, ARKO is well-positioned for a favorable financial outlook.

ARKO Corp's outlook is negatively affected by anticipated EBITDA declines in the range of mid-single to high-single digits for 2024, alongside a decline in same-store sales by 2.8%. The company's strategy to maximize gross profit appears to be compromising overall volume, with same-store gallon sales declining significantly over the past four years by 28-32%. Furthermore, ARKO's adjusted EBITDA for the fourth quarter of 2023 fell short of expectations, driven by softer fuel gallons and margins, which raises concerns about its future organic volume growth and overall valuation compared to peers.