Parkland Fuel Corp. (TSX: PKI), Canada’s largest independent marketer of fuel and petroleum products and its second-largest convenience store operator, watched its stock rally 4.89% on Friday following the release of its third-quarter earnings results. The stock still sits more than 18% below its 52-week high of $32.45 reached back May, so let’s break down the quarterly results to determine if this could be the start of a sustained rally higher.
The results that ignited the rally
Here’s a quick breakdown of 10 of the most notable financial statistics from Parkland’s three-month period ended September 30, 2017, compared with the same period in 2016:
| Metric | Q3 2017 | Q3 2016 | Change |
| Sales and operating revenue | $2,600.6 million | $1,638.1 million | 58.8% |
| Adjusted gross profit | $266.3 million | $171.1 million | 55.6% |
| Adjusted EBITDA | $96.4 million | $60.3 million | 59.9% |
| Net earnings | $12.7 million | $14.7 million | (13.6%) |
| Earnings per diluted share (EPS) | $0.10 | $0.15 | (33.3%) |
| Adjusted distributable cash flow (ADCF) | $65.3 million | $33.2 million | 96.7% |
| ADCF per share | $0.50 | $0.35 | 42.9% |
| Fuel and petroleum product volume (million litres) | 3,556.6 | 2,658.6 | 33.8% |
| Total assets | $4,825.1 million | $2,424.0 million | 99.1% |
| Weighted-average number of common shares outstanding (millions) | 130.5 | 95.6 | 36.5% |
What should you do now?
It was a phenomenal quarter overall for Parkland, highlighted by record adjusted EBITDA of $96.4 million, and these results were driven by its acquisitions of CST Brands’s Canadian assets and Chevron’s downstream gasoline retailing business, as well as “strong organic growth” in its base businesses across all segments. That being said, I think the market responded correctly by sending Parkland’s stock higher in Friday’s trading session, and I think will continue higher from here as investors continue to pile in to gain exposure to one of North America’s fastest-growing companies.
It’s highly important to note that Parkland is a dividend aristocrat, which will help attract investors as well. It currently pays a monthly dividend of $0.09617 per share, equating to $1.154 per share on an annualized basis, which gives its stock a lavish 4.3% yield. Foolish investors must also note that the company’s 4.8% dividend hike in March has it on track for 2017 to mark the fifth consecutive year in which it has raised its annual dividend payment, and I think its very strong growth of ADCF will allow this streak to easily continue into the 2020s.
With all of the information provided above in mind, I think all Foolish investors should strongly consider making Parkland a long-term core holding.
