Energy MLPs can offer an appealing mix of income and exposure to fuel markets, and CrossAmerica Partners LP CAPL and Global Partners LP GLP both fit that description. Yet the two partnerships bring different strengths. CAPL stands out for its high distribution yield, improving coverage and operating discipline, while GLP offers a larger integrated platform, lower leverage and a cheaper valuation.
The Case for CAPL Stock
CrossAmerica Partners has a fairly straightforward business. It supplies fuel to gas stations, operates convenience stores and owns or leases properties tied to fuel retailing. Its network is large, reaching about 1,500 locations across 34 states, while the partnership owns or leases roughly 900 sites. Relationships with several major fuel brands also help provide a broad and recurring source of business.
Its recent cash-generating ability has improved noticeably. Second-quarter adjusted EBITDA, a measure of operating performance, rose 40% year over year to $51.8 million. More importantly for investors who value income, distributable cash flow — the cash available to support investor payouts — increased 50% to $33.6 million. CAPL’s distribution coverage ratio also strengthened to 1.68X from 1.12X, meaning it generated considerably more cash than it needed to cover its quarterly distribution of $0.525 per unit. The trailing-12-month coverage ratio improved to 1.39X from 1.00X, adding support to its yield of more than 9%.
Its convenience-store business is improving as well. Retail gross profit increased 13%, supported by stronger profits from fuel sales, merchandise and other activities. The percentage of merchandise sales retained as gross profit rose to 29.5% from 28.2%, despite CAPL operating fewer company-run stores. Management is continuing to spend on selected store renovations and expanded food offerings, which could encourage customers to spend more inside its stores and support better margins over time.
CrossAmerica Partners has also been keeping a close eye on costs and debt. Operating expenses declined across both its retail and wholesale businesses. At the same time, cash generated by the business and proceeds from property sales helped reduce borrowings. Its leverage ratio declined to 3.57X, while the maturity of its credit facility was pushed out to July 2031. Around 60% of the facility balance is protected by interest-rate swaps at a fixed rate of roughly 3.4%, reducing some exposure to changing interest rates.
The main concern is weaker fuel demand. Retail fuel volumes declined 12% and wholesale volumes fell 11% in the latest quarter. Higher pump prices, changes to CAPL’s store portfolio and the loss of some independent dealer contracts weighed on volumes. Therefore, if fuel profit margins fall before sales volumes recover, CrossAmerica Partners could find it harder to maintain the recent pace of profit growth.
The Case for GLP Stock
Global Partners stands out for the size and reach of its operations. The partnership operates or supplies about 1,600 fueling locations and has dedicated storage at 54 liquid-energy terminals, with roughly 22.3 million barrels of storage capacity. Its business stretches from fuel storage and wholesale distribution to gas stations and convenience stores. This broad setup gives GLP several sources of earnings rather than relying on just one part of the fuel market.
Recent results show the benefit of that diversified model. Adjusted EBITDA increased to $148.2 million from $98.2 million, while adjusted distributable cash flow climbed to $92.5 million from $52.3 million. The partnership also generated enough cash to comfortably cover its payouts, with distribution coverage of 2.25X, or 2.19X after accounting for preferred-unit distributions. At the same time, GLP raised its quarterly distribution to $0.78 per unit, equivalent to $3.12 annually, extending its long run of distribution increases.
Its financial position provides another reason for optimism. Global Partners’ leverage stood at 2.85X, below CAPL’s level, giving the partnership more room to manage debt and fund future investments. It also redeemed its Series B preferred units, which carried a 9.5% fixed rate. Removing this relatively expensive source of financing simplified the capital structure and strengthened financial flexibility. Management continues to see opportunities for acquisitions and remains focused on buying assets that fit well with GLP’s existing network.
There are, however, some areas to watch. Management expects current fuel-market pricing conditions to make it more expensive to hold inventory that has been protected through hedging. Volatile refined-product prices can also make inventory management more difficult. In addition, fuel volumes in the Gasoline Distribution and Station Operations and Commercial businesses declined from a year earlier. Higher prices and inflation are also influencing some customers, with people making slightly smaller fuel purchases or choosing lower-priced gasoline grades. So far, management has said these changes have not had a major impact on the overall business.
Price Performance
CrossAmerica Partners has been the stronger performer over the past year, gaining 11.6% compared with 0.5% for Global Partners. On recent market momentum, CAPL clearly leads.
Valuation
GLP has the advantage here. It trades at about 11.85X forward earnings, well below CAPL’s 19.71X. Investors therefore pay a higher multiple for CrossAmerica Partners’ stronger momentum and income profile.
Earnings Estimates
Both partnerships have seen sharp upward revisions. The Zacks Consensus Estimate for CAPL’s 2026 earnings rose 25.5% over the past 60 days, from $1.06 to $1.33.
GLP’s estimate increased 24.6%, from $4.71 to $5.87. CAPL holds a slight edge in revision momentum.
Which Stock Is the Better Buy?
Both CAPL and GLP offer credible investment cases. Global Partners looks stronger on valuation, leverage and platform scale, while CrossAmerica Partners offers the higher yield, better recent price performance and slightly stronger estimate revisions. With CAPL sporting a Zacks Rank #1 (Strong Buy) compared with GLP’s Zacks Rank #2 (Buy), CrossAmerica Partners is the better buy at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).