The Pantry, Inc. (PTRY)

whitepapers (45.85) Submitted: 6/23/08 7:09 AM : Start Price: $9.57 PTRY Score: -94.14

Just too much debt. This is not the time for gas/convience stores to be overleveraged. The cost of crude oil keeps going up and suppliers can't pass all of the increase to thier consumers. Even if Pantry is able to start passing the increases on to their customers, their customers are going to have to cut back on purchases - both in gas and convient store products. Exxon just announced (6/13/08) that they would be selling their company owned stations due to lack of profitability. Pantry may try to sell some less profitable stations but they aren't going to get anywhere near what they paid for them. Panty lost money last quarter and I don't think things will be any different for several quarters. This is a business that I just liked - when paydirt picked them I thought hey this is something I think I can judge something I understand - but something in my gut said that something wasn't right. I couldn't get over their debt obligations - I'm not sure if that is all that troubled me but since I started watching them their stock is down 66%. There might not be much room to drop more but there might be a chance of the B (bankruptcy) word. If they start selling off stations and lessen their debt load then I'll probably pull my underperform rating.

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