Friday, August 16, 2013

Alimentation Couche-Tard Inc 2

I do not own this stock Alimentation Couche-Tard Inc. (TSX-ATD.B, OTC-ANCUF), but I used to. Today I want to take a look at what the analyst say about this stock and also look at what different stock price tests say about the current stock price.

When I look at insider trading, I find $8.7M of insider selling and net insider selling at $8.3M. There is some $0.4M of insider buying. A lot of recent selling took place around the $64-$65 price. There are not only options but Phantom Share Unit (Unité d'action fictive). The Class A multiple voting shares are owned by insiders and Metro (with some 22%). Some insiders, like Jacques D'Amours own in the hundreds of million dollars of Shares (i.e. worth some $638M ).

The CEO has $1.1B of Class A shares and $171M of Class B shares and has options worth $48.8M. The CFO has shares worth $1M and has options with $2.6M. One officer has some shares and has some options but there are officers with both Class A and Class B shares worth in the $100Ms. A director has shares worth $0.8M and has some options. This is just to give you an idea on insider share ownership and option values.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.48, 12.00 and 14.52. The 10 year low, median and high median P/E Ratios are a bit higher at 12.35, 16.06 and 19.77. The current P/E Ratio is 15.21 based on a stock price of $59.17 and 2014earnings estimates of $3.89 CDN$. (Note financial years for this company end in April each year.)

The current Graham price is $39.02 and the 10 year low, median and high median Price/Graham price Ratios 1.10, 1.50 and 1.85. The current P/GP Ratio is 1.52 based on a stock price of $59.17. The 10 year median Price/Book Value per Share Ratio is 3.32. The current P/B Ratio is 3.40 a value only some 2% higher.

The current dividend yield is 0.51% and the 5 year median dividend yield is 0.81% a value some 38% higher. Most of the test points to the price being a bit higher than the median but within the reasonable arrange. However, the dividend yield tests, which is a very important test says otherwise. It says that the stock price is currently too high. If there is disagreement among the stock price tests, it is best to go with the dividend yield test unless there is some good reason not to. In this case, I see no good reason why not to go with the dividend yield test.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 month consensus stock price is $61.80. This implies a total return of 4.95%, with 0.51% from dividends and 4.44% from capital gains. This is really not a great potential return.

The Motley Fool Site suggests that investor might want to wait another business quarter to see how this company swallows Statoil Fuel & Retail and see whether or not it starts to pay down its debt. The site has an interview with Alimentation Couche-Tard Inc. president and CEO Alain Bouchard who says that "fiscal 2014 should be a year of execution and achievements".

I have always liked this company, but I feel that the price is currently too high. I do hope to own it again in the future. It might make a good addition to the stocks in the TFSA since I sold Shoppers and have some money to spend. See my spreadsheet at atd.htm.

This is the second of two parts. The first part was posted on Thursday, August 15th, 2013 and is available here.

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 Alimentation Couche-Tard.

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 or StockTwits.

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