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

As of Sep. 30, 2012, Standard Parking and Central Parking operated 9% and 35% of its locations under leases respectively. Standard Parking is generally responsible for all the operating expenses of its leased locations
and it is susceptible to any increases in costs. In addition, certain of the leases to which Central Parking is party include provisions allocating responsibility for all structural repairs required on the property to Central Parking, including repairs arising from ordinary wear and tear. This results in potential liabilities associated with any structural repair obligations.

The supply of parking-related assets may increase in future, because some state and municipal governments have either sold or entered into long-term leases of public assets such as government- owned parking garages located in downtown commercial districts and parking operations at airports.

Approximately 22% and 31% of Standard Parking’s and Central Parking’s collective bargaining contracts were up for renewal in 2012 respectively. These collective bargaining contracts represented approximately 5% and 6% of Standard Parking’s and Central Parking’s employees respectively.

Conclusion

Standard Parking’s recurring revenue business model and track record of positive net income and free cash flow for eight consecutive years justify its lofty valuation.

The article Why You Should Park Some Cash in This Parking Facility Leader originally appeared on Fool.com and is written by Mark Lin.

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