Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Standard Parking Corporation (STAN): Why You Should Park Some Cash in This Parking Facility Leader

Page 1 of 2

Standard Parking Corporation (NASDAQ:STAN) is a leading national provider of parking facility management, ground transportation and other ancillary services. Standard Parking, including Central Parking Corporation, its wholly-owned subsidiary, has approximately 25,000 employees and manages more than 4,200 facilities with more than 2.2 million parking spaces in North America. Its operations include parking-related and shuttle bus operations serving more than 75 airports. USA Parking System, a wholly-owned subsidiary of Central Parking, is one of the premier valet operators in the nation with more four and five diamond luxury properties, including hotels and resorts, than any other valet competitor. On Oct. 2, 2012, Standard Parking announced that it has closed its merger with the parent of Central Parking Corporation, which is now a wholly-owned subsidiary of the company.

Business Quality

Standard Parking is the leading provider of outsourced parking facility management services in the country with a operating history of more than 80 years. Its strong local presence and national footprint, with approximately 4,400 locations across the US and five provinces in Canada, drives economies of scale and operating efficiencies by standardizing processes and managing overhead cost. Standard Parking’s clients includes some of the nation’s largest private and public owners, municipalities, managers and developers of major office buildings, residential properties, shopping centers, sports complexes, hotels, and hospitals and medical centers. Its industry end-market diversification also allows it to minimize exposure to any industry-specific volatility.

Standard Parking’s business model generates visible and predictable cash flows, through a high proportion of fixed fee and reverse management contracts, which are not dependent upon the level of utilization of those parking facilities. Its contract mix with management contracts representing 92% of locations and 86% of gross profit, for the trailing twelve month period ended Sep. 30, 2012, moderates the impact of broader economic cycles. In addition, contract retention rates have approximated 91% over the past five years.

A number of positive industry trends should benefit larger outsourced commercial parking facility management providers like Standard Parking. Firstly, a significant number of national property managers and developers own or manage multiple locations as a result of past industry consolidation. They are likely to favor larger parking facility operators, such as Standard Parking, that can provide specialized, value-added professional services with nationwide coverage. Secondly, there is a growing trend of vendor consolidation with many parking facility owners and managers reducing the number of parking facility management relationships they maintain to reduce costs. Lastly, parking facility owners are increasingly outsourcing the management of their parking and related operations to independent operators, as a way of reducing their operating budgets.

ABM Industries, Inc. (NYSE:ABM)Valuation and Financial Analysis

Standard Parking currently trades at a trailing twelve months P/E of 27.0 and a trailing twelve months EV/EBITDA of 15.6. Standard Parking achieved a trailing twelve months ROE of 22.9% and a trailing twelve months ROA of 4.8%. It has had a stellar earnings and cash flow historical track record with positive net income and free cash flow for eight consecutive years since 2004. It also operates on negative working capital, with payable days typically exceeding receivable days. Management grew Standard Parking’s gross profit and EPS (adjusted for acquisition and merger related costs) by a CAGR of 3.9% and 9.2%, respectively, since 2005, its first full year post-IPO. Standard Parking is highly geared with a gross debt-to-equity ratio of 122% and net gearing of 105%. This is partly mitigated by a decent interest coverage ratio of 8.5 and strong free cash flow generation. It does not pay a dividend, but has spent $119 million on share repurchases. As of Sep. 30, 2012, approximately $12 million remained available for stock repurchases under the June 2011 authorization by the Board of Directors.

Competitor Analysis

ABM Industries, Inc. (NYSE:ABM) remains Standard Parking’s only listed competitor, after its merger with Central Parking. Unlike Standard Parking, ABM Industries is not a pure play on parking facility management, but a diversified company that operates in four segments: janitorial, facility solutions, parking and security. The market currently values ABM Industries at a trailing twelve months P/E of 19.4 and a trailing twelve months EV/EBITDA of 9.3, a significant discount to Standard Parking. Despite having a lower gearing at 25%, ABM Industries’ trailing twelve months and five year average ROAs at 3.4% and 3.8% respectively, are inferior to that of Standard Parking.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!