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 had 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 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 on this spreadsheet, all is green ink. This company has done very well. It is not much of a dividend stock because the yield is generally below 1%. However, if you are building a portfolio, this could be a good stock to have. The financial year end of at the end of April each year.
The dividend yields are low with dividend growth good. The current yield is low (under 2%) at 0.68%. The 5, 10 and historical yields are also low all at 0.60%. This dividend growth on this stock has always been good (14% and higher). See chart below. However, if you are looking at yield on your original cost, this stock does well over a long term. Yield on original cost after 10, 15 and 20 years for 2020 is 7.75%, and 61.79%, and 283.54%.
The Dividend Payout Ratios (DPR) are very good The DPR for EPS for 2020 is very low at just 10% with 5 year coverage at 10%. The DPR for CFPS for 2020 is 6% with 5 year coverage also at 6%. The DPR for Free Cash Flow for 2020 is 9% with 5 year coverage also at 9%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2020 is 0.24 and is good. The Liquidity Ratio for 2020 is 1.72 and higher than it has been in the past as the 5 year median is just 1.07. The Debt Ratio is good at 1.64 with a 5 year median of 1.68. The Leverage and Debt/Equity Ratios for 2020 are fine at 2.62 ad 1.59.
The Total Return per year is shown below for years of 5 to 24 to the end of 2019 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 26.19% | 11.88% | 11.26% | 0.62% |
| 2009 | 10 | 27.76% | 29.10% | 28.17% | 0.93% |
| 2004 | 15 | 14.91% | 19.86% | 19.28% | 0.59% |
| 1999 | 20 | 26.30% | 25.65% | 0.65% | |
| 1995 | 24 | 28.20% | 27.58% | 0.62% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2019 in US$. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 21.36% | 9.09% | 8.52% | 0.94% |
| 2009 | 10 | 24.11% | 26.60% | 25.66% | 0.58% |
| 2004 | 15 | 13.44% | 13.73% | 13.27% | 0.46% |
| 2001 | 18 | 15.34% | 14.92% | 0.42% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.93, 15.85 and 18.45. The corresponding 10 year ratios are 12.26, 15.89 and 18.94. The corresponding historical ratios are 12.50, 16.17 and 20.10. The current P/E Ratio is 20.13 based on a stock price of $45.20 and 2021 EPS estimate of $2.24. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms. Also, the P/E Ratios have been fairly consistent over time.
I get a Graham Price of $24.45. 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 1.85 based on a stock price of $45.20. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms.
I get a 10 year median Price/Book Value per Share Ratio of 3.26. The current P/B Ratio is 3.82 based on a stock price of $45.20, Book Value of $13,293M, and Book Value per Share of $11.83. The current ratio is 17% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and but above median. This is in CDN$ terms.
I get a 10 year median Price/Cash Flow per Share Ratio of 9.01. The current P/CF Ratio is 12.68 based on Cash Flow per Share estimate for 2021 of $3.30 ($2.70 US$), Cash Flow per Share of $3,967M and a stock price of $45.20. The current ratio is 41% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$ terms.
I get an historical median dividend yield of 0.60. The current dividend yield is 0.62 based on dividends of $0.28 and a stock price of $45.20. The current dividend yield is 3% above the current dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$ terms.
I get a 10 year median dividend yield of 0.60. The current dividend yield is 0.62 based on dividends of $0.28 and a stock price of $45.20. The current dividend yield is 3% above the current dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$ terms.
The 10 year median Price/Sales (Revenue) Ratio is 0.50. The current P/S Ratio is 0.75 based on 2021 Revenue Estimate of $51,163M, Revenue per Share of $45.98 and a Stock Price of $34.45. The current ratio is 49% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$ terms. You will get similar results in CDN$ terms.
Results of stock price testing is that the stock price is relatively expensive. There is a disconnect between the testing for dividend yield and P/S Ratio. They have still increased their dividend this year by 12%, however, sales have fallen both in 2020 and are expected again to fall in 2021. With their latest dividend increase of 12%, the company obviously thinks that they will do fine in the end. They also have a very low dividend cost. I will go with the P/E Ratio and put the stock price as relatively expensive. There is nothing wrong with the rest of the tests. In CDN$ the P/B Ratio test shows that the stock price as reasonable but above the median. However, in US$ terms, the P/B Ratio is showing the stock price as relatively expensive. There is not usually much difference between testing in US$ or CDN$ terms.
Is it a good company at a reasonable price? I think that this company has done very well. It is a dividend growth stock, but the dividend is below 1%, so it is a better stock for people building a portfolio. It would seem that at the present time, the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (8). The consensus would be a Buy. The 12 month stock price consensus is $48.48 ($36.71 US$). This implies a total return of 7.87% based on a current stock price of $45.20. You have to wonder about the strong buy rating and only 7.87% total return over the next year.
There is not much coverage for this stock on Stock Chase but the last one says it is a partial sell because of E-Car adoption and changes coming with that. Demetris Afxentiou on Motley Fool thinks this stock is a great defensive stock. A Writer on Simply Wall Street says inferior analyst earnings forecast is not affecting P/E Ratio. A writer on Simply Wall Street says the intrinsic value for this stock is $63.59 CDN$. The Blogger Dividend Earner recently reviewed this stock.
Alimentation Couche-Tard Inc operates a network of convenience stores across North America, Ireland, Scandinavia, Poland, the Baltics, and Russia. The company primarily generates income through the sale of tobacco products, groceries, beverages, fresh food, quick service restaurants, car wash services, other retail products and services, road transportation fuel, stationary energy, marine fuel, and chemicals. In addition, the company operates more stores under the Circle K banner in other countries such as China, Egypt, and Malaysia. 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 Genworth MI Canada Inc (TSX-MIC, OTC- GMICF) ... learn more on Wednesday, August 26, 2020 around 5 pm. Tomorrow on my other blog I will write about Enbridge Inc.... learn more on Tuesday, August 25, 2020 around 5 pm.
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