Alimentation Couche-Tard Inc.

I do not own this stock Alimentation Couche-Tard Inc. (TSX-ATD.B, OTC-ANCUF), but I used to. In 2004 I bought this stock as it has a good reputation and my spreadsheet showed I should do well with it. The only problem I had with it then was it had no dividend. I bought more of this stock in 2006 as it had a good past record and had started to pay a dividend. I did not buy much mid-year as P/E was rather high.

By the year end I bought more as TD Bank said it was a good time to buy this stock. I sold the stock in my trading account in 2007 as I was raising mortgage money and this stock had gone down so was cheap, tax wise, to sell. In 2013, I sold the stock in my Pension account as it had the lowest dividend yield and I had to raise money in this account because of yearly withdrawals.

The dividends are quite low on this stock coming in currently at 0.5%. It has never been very high and barely, at the best of times reaching 1%. However, the increases have been very nice. The 5 and 7 year growth in dividends is at 17% and 18% per year, respectively. The Dividend Payout Ratio is quite low with the 5 year median DPR for earnings at 10% and for cash flow at 5%.

The total return on this stock over the past 5 and 10 years is very good. The 5 and 10 year total return is at 34.55% and 25.06% with 33.75% and 24.48% per year coming from capital gains and 0.8% and 0.58% per year from dividends.

Outstanding shares have decreased over the past 5 years by 1% per year and increased over the past 10 years at 1% per year. Shares have increased due to stock options and share issues. They have decreased due to Buy Backs. There are two types of shares with Class A shares being multiple voting shares and Class B shares being subordinate voting shares. There has also been conversion of Class A shares into Class B shares.

This company reports in US currency and has done better in US$ than in CDN$. However the company has shown great growth in Revenues, Earnings and Cash Flow. Revenue is up by 18% and 31% per year over the past 5 and 10 years. Earnings per Share are up by 27% and 23% per year over the past 5 and 10 years. Cash Flow per Share is up by 23% and 24% per year over the past 5 and 10 years.

The Return on Equity is consistently good with the one for the financial year ending in April 2013 at 17.8% and with a 5 year median of 19.1%. The ROE on Comprehensive Income is usually different and sometimes lower and sometimes higher than the ROE on net income. For example for the year ending April 2013 it is 30% higher and for the year ending April 2012 it was 7% lower.

The Liquidity Ratio is rather low at 1.05, but if you add in cash flow after dividends it is higher at 1.40. Unfortunately, most retail food companies tend to have rather low Liquidity Ratios and this is not uncommon. The Debt Ratio for the April 2013 financial year is rather low at 1.44 and this is unusual for this stock. The 5 year median Debt Ratio is 1.65.

This is a dividend growth stock. It is suitable for diversification and to build up a dividend income portfolio. I would buy it again, but only for my trading account. This is because I am withdrawing money from my RRSP accounts and I like to have stocks with higher dividend yields than this one had. See my spreadsheet at atd.htm.

This is the first of two parts. Second part will be posted on Friday, August 16th, 2013 and will be 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.