Alimentation Couche-Tard Inc.

On my other blog I am today writing about stocks I looked at more closely in my monthly update continue...

Sound bite for Twitter and StockTwits is: Div growth consumer stock, low div. I personally would not buy a stock with a dividend yield of less than 1%. If you are patient this stock pops above 1% occasionally. My reason is that when the dividend yield is below 1% it takes so long to get a decent yield from your original purchase. See my spreadsheet on Alimentation Couche-Tard Inc.

I do not own this stock of Alimentation Couche-Tard Inc. (TSX-ATD.B, OTC-ANCUF). In 2004 I bought this stock as it had a good reputation and my spreadsheet showed I should do well with it. I bought more of this stock in 2006 as it had a good past record and had started to pay a dividend. 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.

In 2006 this company started to report in US$, but their dividends are still paid in CDN$. Currently the dividend yield is very low at just 0.37% based on a stock price of $59.63. It also has a 5 year median dividend yield of just 0.60%. The dividend growth is quite good with the 5 and 10 year dividend growth at 29.4% and 21.6% per year. The latest increase was in 2015 and the increase was for 22.2%.

The Dividend Payout Ratios are also good. The DPRs for 2015 for EPS was 9.7% and for CFPS was 6.6%. The 5 year median DPRs for EPS is 9.6% and for CFPS is 5.5%. This stock has a financial year ending at the end of April each year.

Shareholders have done well lately with the 5 and 10 year total return at 46.61% and 22.96%. The portion of this total return attributable to dividends is 0.71% and 0.41%. The portion of this total return attributable to capital gain is 45.90% and 22.56%.

The outstanding shares have not changed much with 5 year growth of 0.6% per year and a 10 year decline of 0.8% per year. Since this company is reporting in US$, I will use US$ growth values. Revenue, earnings and cash flow growth has all been good.

Revenue has grown at 16% and 15.4% per year over the past 5 and 10 years. Revenue per Share has grown at 15.3% and 16.2% per year over the past 5 and 10 years. Analysts expect Revenue growth at 10% for 2016. However if you look at the 12 month period to the end of April 2015 and the 12 month period to the end of the first quarter of 2016, Revenue is flat.

EPS is up by 25.2% and 20.1% per year over the past 5 and 10 years. Analysts expect growth in EPS at around 35% in 2016. If you look at the 12 month period to the end of April 2015 and the 12 month period to the end of the first quarter of 2016, EPS growth is just 3.6%. At least it is going in the right direction.

Cash Flow has grown at 20.5% and 15.3% per year over the past 5 and 10 years. CFPS has grown at 19.8% and 16.2% per year over the past 5 and 10 years. Analysts expect cash flow to decline by 3% in 2016. However if you look at the 12 month period to the end of April 2015 and the 12 month period to the end of the first quarter of 2016, Cash Flow is up by 2.9%.

The Return on Equity has been above 10% every year over the past 10 years. The current ROE is 23.9% and it has a 5 year median of 20.4%. The ROE on Comprehensive Income is a lot lower at just 0.2%. The difference is mostly currency translations. The 5 year median ROE on comprehensive income is 20.4%. However, this does suggest that the earnings are not quite as good as they appear.

Debt ratios could be better but are fine. The Liquidity Ratio is 1.12. If you had in cash flow after dividends the ratio is 1.79. The Debt Ratio is 1.56. I would prefer the Liquidity Ratio to be 1.50. The Leverage and Debt/Equity Ratios in 2015 are 2.77 and 1.77. I would prefer them to be at less than 2.00 and less than 1.00. However, these ratios are not a concern at this point.

This is the first of two parts. The second part will be posted on Tuesday, September 15, 2015 and will be 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 Inc.

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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