The Pantry (PTRY), a convenience store chain in the southeastern United States, produced a penny of profit in first-quarter earnings announced yesterday. However, the Pantry maintains its long-term goals remains intact.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_02_06_PTRY.mp3
In a statement released Thursday, The Pantry said earnings decreased primarily because of less profitable gasoline sales.
According to the quarterly report, The Pantry generated 5% sales growth. Same store merchandise sales advanced a paltry 1.9%. Gasoline margins decreased more than 60% from last year, despite an increase in total gallons sold of 14%. Merchandise revenue was strong at 10.3%. Merchandise costs grew at a lower pace and this allowed for increased profitability.
Merchandise is the key to a convenience store’s success. Gas margins are typically significantly less, generally around 5%, than the nearly 40% margin enjoyed on merchandise.
Analysts have a positive outlook for the Pantry. Recently, John Heinbockel, a star analyst with Goldman Sachs, boosted the company’s rating to four stars. The Pantry has also been featured in recent articles appearing on the Motley Fool website.
As of December 28, 2006, The Pantry operated 1,506 convenience stores in 11 states under various names including Kangaroo Express, its primary operating banner. The company provides a mix of branded and private brand gasoline through 1470 stores. The company was founded in 1967 and is headquartered in Sanford, North Carolina.
Competitors:
Competitors for PTRY include: 7-Eleven, Inc. (private), Alimentation Couche-Tard Inc. (private), RaceTrac Petroleum, Inc. (private), and Delek US Holdings Inc. (DK).
Potential Trades:
All of the following option trades have 40 days until expiration. Pantry Inc. is currently trading at $50.62. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| Covered Call – Pantry Inc. (The) (PTRY) $ 50.62 (39) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PWRCJ | 07 MAR 50.00 | $2.60 | 5.10% | 4.30% | 4.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bull-Call Debit Spread Pantry Inc. (The) (PTRY) $ 50.62 (39) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Opt |
Strike Info |
Bid Price |
Buy Option |
Strike Info |
Ask Price |
% Return |
Break Even |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PQRCJ | 07 MAR $50.00 | $2.60 | PQRCH | 07 MAR $40.00 | $11.10 | 17.60% | $48.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The covered call trade, an in the money covered call, offers 5.1% downside protection and a potential profit of 4.3% if the stock remains unchanged or rises. The net cost of this trade, per 100 options, is $4,794.00.
The second trade is a bull call debit spread. This trade offers 17.6% potential profit if the stock remains above $50.00. If the stock decreases below the break-even price of $48.50, the investment begins to lose money. If the stock price goes below the lower strike price of $40.00, the entire investment is lost. The net cost of this trade, per 100 options, is $855.00.
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags]United States, John Heinbockel, Goldman Sachs, Motley Fool, Kangaroo Express, Sanford, North Carolina, 7-Eleven, Inc., Alimentation Couche-Tard Inc., RaceTrac Petroleum, Inc., DK, Delek US Holdings Inc., PTRY, Pantry Inc. (The), covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]