Monday, August 20, 2012

Alimentation Couche-Tard Inc

On my other blog are some comments about "Women on Boards". See comments blog.

I own this stock of Alimentation Couche-Tard Inc. (TSX-ATD.B). I bought this stock in 2004 and some more in 2006 and 2007. I have made a return of 17.26% per year total return on this stock. Dividends are very low and the portion of this total return attributable to dividends is just 0.51%. The rest, 16.75% is attributable to capital gains.

When I bought this company they were not paying dividends. It was not meant to be a long term buy. However, I changed my mind and kept the stock after they started dividends in 2006. Mind you, dividends are quite low as the company has a 5 year median dividend yield of just 0.81%. My experience is lower for the simple fact that I held the stock when it was not paying dividends. The portion of my return in dividends is just under 3%.

This stock has been doing well of late. If you look at the stock over the past 5 and 10 years using their financial years ending in April, you find that the stock has 5 and 10 year total returns of 13.14% and 18.50% per year. The portion of this return attributable to dividends is 0.56% and 0.46%. The rest is all capital gain.

I have just held this stock for 8 years and my dividend yield on my original purchase is just 2%. You would have to hold the stock for 15 years to more to get a really good return on your original purchase. Increases in dividends have been very good with dividend increases over the last 5 and 6 years at 20.1% and 18.4%. It is currently a fast growing stock.

This is considered to be a consumer staple stock. It has down much better than the TSX since our recent problems in 2008. This company does a lot of business in the US so it reports in US$. It has, of course, done better in US$ than in CDN$. However, it has done well in both currencies.

Over the past 5 and 10 years the Revenues have increased by 11% and 21% per year, respectively. The Revenue per Share has grown by 13% and 20% per year. The increase or decrease in shares accounts for the difference between the Revenue growth and the Revenue per Share growth.

The shares outstanding are up 1% over the past 10 years, but are down almost 2% over the past 5 years. The company tends to buy back shares each year that generally more than covers the options they give out.

Earnings per Share have also grown well over the past 5 and 10 years with growth at 18.6% and 22.3% per year, respectively. Cash Flow per Share has also grown well over the past 5 and 10 years with growth at 12.3% and 18.6% per year, respectively. There is the same story with Book Value per Share growth at 13.2% and 17.7% per year growth over the past 5 and 10 years.

The Return on Equity is also great. The ROE for the financial year ending April 2012 is 21%. The 5 year median ROE is 19.1%, an equally great ROE. The ROE based on comprehensive income is very similar with the ROE for April 2012 at 19.6% and the 5 year median at 19.6%. (The ROE on comprehensive income confirms the quality of the ROE on net income.)

As far a debt ratios goes, the Liquidity Ratio for financial year ending April 2012 is quite low at 0.85. This means that the current assets do not cover the current liabilities. However, the cash flow is quite strong and if you add in cash flow after dividends you get a more acceptable value of 1.32. The 5 year median Liquidity ratio is 1.10.

The Debt Ratio is much better at 1.95. This has a 5 year ratio of 1.78. The Leverage and Debt/Equity Ratios are fine at 2.05 and 1.05.

This has been a great stock for me. It is doing great currently even though the overall market is not. This stock would be considered a dividend growth stock. I think that why I have good dividend income growth is because I have a variety of stocks with low, median and high dividends and low, median and high dividend growth rates.

In North America, Couche-Tard is the largest independent convenience store operator (whether integrated with a petroleum company or not) in terms of number of company-operated stores. Its stores offer a broad mix of food products, beverages, other merchandise and services and motor fuel. Grouped under three main brands: Couche-Tard, Mac's and Circle K. Stores are located across 10 Provinces of Canada in three geographic markets (East, Centre and West), and across 43 American states and the District of Columbia in eight major markets (Great Lakes, Midwest, Southeast, Florida, Gulf, Arizona, West Coast and Southwest). In addition, a network of about 3,700 licensees extends in seven other regions worldwide (China, Guam, Hong Kong, Indonesia, Japan, Macau and Mexico). Its web site is here Couche-Tard. See my spreadsheet at atd.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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