CAPL

We rate CrossAmerica Partners LP (CAPL) as a Hold with a composite score of 54.4/100 at a current price of $20.27. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (90th percentile) and value (71th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and momentum (43th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), Low uncertainty, and Poor capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CrossAmerica Partners LP holds a mid-tier position (#28 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 54.4/100 places it at rank #1351 in our full 7,333-stock universe. At $785M in market capitalization, CrossAmerica Partners LP is a small-cap player in the Wholesale Trade space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -14% combined with momentum at the 43th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 11% (-12.0pp vs sector) narrow to operating margins of 2% (-0.8pp vs sector) and net margins of 1.0%, yielding a gross-to-net conversion rate of 10%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $20.27, CrossAmerica Partners LP appears undervalued relative to its fundamentals. Our value factor score of 71/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 19.2x (roughly in line with the sector median of 19.1x), EV/EBITDA of 8.2x (near the sector median), P/S of 0.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to CrossAmerica Partners LP. The company exhibits strong financial stability with a beta of 0.34, and a stability factor in the 90th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.34 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 90th percentile and quality factor at the 48th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (90th percentile) suggests predictable business dynamics; a 10.24% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CrossAmerica Partners LP's capital allocation as Poor. Key concerns include low returns on equity (-172.0%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — CrossAmerica Partners LP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, CrossAmerica Partners LP receives a Hold rating with a composite score of 54.4/100 (rank #1351 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Low uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 57/100.

Our analysis supports a neutral stance on CrossAmerica Partners LP. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.