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 sold the stock in my trading account in 2007 as I was raising mortgage money and this stock had gone down so it 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 was updating my spreadsheet, I noticed that currently the stock is doing well for its shareholders. My spreadsheet has lots of green ink. This company has been reporting in US$ since 2005, but dividends are paid in CDN$. Also, it has a financial year ending April 30 each year.
Dividends are paid in CDN$ and they were started in 2006. Dividend yields are very low and they have seldom been above 1%. The current dividend 0.61%. The 5, 10 and historical dividend yields are 0.56%, 0.60% and 0.60%. Dividend growth is good, with the increases over the past 5, 10 and 12 years all 15% or over in both CDN$ and US$. See charts below. The last dividend increase was for 25% and it was done in 2019.
The Dividend Payout Ratios are very low and therefore good. The DPR for EPS for 2019 was 10% with 5 year coverage also at 10%. The DPR for CFPS for 2019 was 6% with 5 year coverage also at 6%.
Debt Ratios are fine, but the Low Liquidity Ratio is a vulnerability. The Long Term Debt/Market Cap is low and therefore good at 0.17. The Liquidity Ratio is too low at 0.77. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends, it becomes 1.30. I prefer this to be 1.50 or better. The Debt Ratio is fine at 1.68. The Leverage and Debt/Equity Ratios are also fine at 2.53 and 1.50.
The Total Return per year is shown below for years of 5 to 23 to the end of 2018 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 28.61% | 21.35% | 20.59% | 0.76% |
| 2008 | 10 | 24.72% | 31.27% | 30.30% | 0.97% |
| 2003 | 15 | 22.65% | 21.37% | 20.80% | 0.57% |
| 1998 | 20 | 25.32% | 24.79% | 0.54% | |
| 1995 | 23 | 28.38% | 27.82% | 0.56% |
The Total Return per year is shown below for years of 5 to 25 to the end of April 2019 US$. I only have US$ stock price for the end of April each year.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 23.27% | 16.42% | 15.81% | 1.14% |
| 2008 | 10 | 23.02% | 34.28% | 33.14% | 0.61% |
| 2003 | 15 | 20.53% | 23.03% | 22.39% | 0.64% |
| 1998 | 20 | 26.80% | 26.20% | 0.60% | |
| 1995 | 23 | 33.28% | 32.57% | 0.71% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.93, 20.44 and 23.86. the corresponding 10 year ratios are 12.26, 15.89 and 18.94. The corresponding historical ratios are 12.79, 16.79 and 20.45. The current P/E Ratio 18.34 based on a current $81.78 and 2020 EPS estimate of $4.46 ($3.35 US$). This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.
I get a Graham Price of $46.52. The 10 year low, median, and high median Price/Graham Price Ratios are 1.14, 1.48 and 1.76. The current P/GP Ratio is 1.76 based on a stock price of $81.78. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 3.18. The current P/B Ratio is 3.79 based on a stock price of $81.78, Book Value of $12,173M and a Book Value per Share of $21.57. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.
I get an historical median dividend yield of 0.60%. The current dividend yield is 0.61% based on a stock price of $81.78 and dividends of $0.50. The current yield is 1.9% above the historical yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.57 based on 2020 Revenue estimate of $81,022M ($60,873M), Revenue per Share of $143.55 and a stock price of $81.78. The current ratio is 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
Results of stock price testing is that the stock price is reasonable to expensive. You cannot ignore the P/S Ratio testing which says the stock is expensive. Also, for this stock the dividend yield test is a good one and the current yield is basically at the historical median. The other tests show the stock price as reasonable, but above the median.
Is it a good company at a reasonable price? I think this is a good dividend growth company. However, I generally do not buy companies when their dividend yield is under1%. It takes too long to get a decent return on your original purchase price. The yield has been 1% in the past but only around a recession. However, if you are not investing for dividend income, you might consider this stock when the yield is lower than 1%.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), and Hold (2). The consensus would be a Buy. The 12 month stock price is $90.96 CDN$ ($68.34 US$). This implies a total return of 11.84% with 11.23% from capital gains and 0.61% from dividends.
See what analysts are saying on Stock Chase. The analysts like this stock and think it is a long term buy. Kay Ng on Motley Fool thinks this is a great and stable consumer stock. A writer on Simply Wall Street thinks this stock is undervalued and its intrinsic value is $99.54 US$ or $134.05 CDN$. Greg Lindenberg on CSP Daily News talks about the company’s investment in Fire & Flower Holdings Corp which is a cannabis retailer. Breaking News on Global News Alerts says this company is giving off sell signals..
Alimentation Couche-Tard Inc. or simply Couche-Tard is one of the largest company-owned convenience store operators in the world with more than 12,000 stores across Canada, the United States, Europe, Mexico, Japan, China, and Indonesia. Its web site is here Alimentation Couche-Tard Inc.
The last stock I wrote about was about was Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF) ... learn more. The next stock I will write about will be Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more on Friday, August 30, 2019 around 5 pm. Tomorrow on my other blog I will write about Purpose of a Corporation.... learn more on Thursday, August 29, 2019 around 5 pm.
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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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