Alimentation Couche-Tard Inc. 2

I do not own this stock of 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. I bought more of this stock in 2006 as it had started to pay a dividend.

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.

When I look at inside trading, I find $4.4M of insider selling and net insider selling at $4.1M with insider buying at $0.3M. Net insider selling is just 0.2% of the market cap and so is a relatively very small amount.

There is a lot of insider ownership, but in the Class A multiple voting shares. Insiders own some 76% of Class A stock and Metro Inc. (TSX-MRU) owns almost 22% of Class A stock. There is little insider ownership of Class B stock.

The CEO and Chairman owns Class A shares worth some 1.8B and Class B shares worth around $272M. Some officers of the company own a lot of Class A stock with one officer owning share worth $992M, another owning shares worth around $503M and another one owning shares worth around $204M.

For the financial year ending in April 2014, outstanding shares were increased by just over 3M for stock options. These shares have a book value of just $1.8M. However, at the end of April 2014 this number of shares was worth $93M. However, this number of shares is just 0.54% of outstanding shares and therefore stock option share issued are a relatively small number.

The 5 year median Price/Earnings per Share Ratios are 10.32, 13.93 and 17.55. The 10 year corresponding P/E Ratios were higher at 12.14, 15.95 and 19.64. The current P/E Ratio is 18.98 based on a stock price of $32.83 and 2015 EPS estimate of $1.73 CND$ and $1.58US$. This stock price test suggests that this stock is getting relatively expensive. Although on an absolute basis a P/E Ratio of 18.98 is not especially high.

I get a Graham Price of $17.37. The 10 year low, median and high median Price/Graham Price Ratios are 1.13, 1.47 and 1.13. The current P/GP Ratio is 1.89. This stock price test suggests that this stock is relatively expensive. On an absolute basis, a P/GP Ratio of 1.89 is quite high.

I get a 10 year median Price/Book Value per Share of 2.88 and the current P/B Ratio is 4.23. The current P/B Ratio is some 47% higher than the 10 year median P/B Ratio. This ratio is based on a stock price of $32.83 and current BVPS of $7.76. This stock price test suggests that this stock is relatively expensive.

The 5 year median dividend yield is 0.80%. The current dividend yield is some 39% lower at 0.49%. The historical average dividend yield is 0.77% and the historical median dividend yield is 0.70% of which are some 36% and 30% higher than the current dividend yield. All these test of the stock price suggests that this stock is relatively expensive.

When I look at analysts' recommendations, I get Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $31.00. This implies a total loss of 5.09% with a capital loss of 5.57% and dividends of 0.49%. Stock price has been moving up lately and maybe that is why the 12 month consensus stock price is lower than the current stock price.

On a long term basis, dividend stock tend to have capital gains growth around the as dividend growth. Dividend growth is 18.95% per year over the past 10 years and capital gain growth is at 20.90%. These are pretty close. It is different looking at 5 year growth where dividend growth is 20.95% per year and capital gain growth is twice as high at 40.79% per year.

Sound bit for Twitter and StockTwits is: stock is relatively expensive. I think that this is a good company and it is doing well, but it is relatively expensive on a number of measurements. See my spreadsheet at atd.htm.

This is the second of two parts. The first part was posted on Thursday, August 28, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Couche-Tard is the largest convenience store operator in North America with over 4,600 company-operated stores. In Europe, with over 1,600 company-operated sites, Couche-Tard is a leader in c-store and road transportation fuel in Scandinavian and the Baltic States, with a growing presence in Poland. 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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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