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 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 revenue has declined the last two years, but analysts expect that Revenue will go higher in 2022. However, analysts do expect a drop in EPS in 2022. So far EPS has held up well for the company. The financial year end is April 30, each year.
The dividend yields are low with dividend growth good. The current dividend yield is low (below 2%) at 0.68%. The 5, 10 and historical dividend yields are also low at 0.63%, 0.60% and 0.62%. The dividend yield has seldom been above 1%. The dividend growth is good (15% and over) at 21% per year for the last 5 years. The last dividend increase was in 2020 and it was for 25%.
This stock has a very low dividend yield, so it might be of interest to look at what sort of yield is now being made on investments made at 5, 10, 15, 20 and 25 years ago. The yield is shown in the table below. For example, if this stock was bought 15 years ago, the shareholder would have a current yield on the original investment of 8.33%. Also, I like to look at what percentage of the original cost that would have been paid by dividends if the stock was purchased 5, 10, 15, 20, and 25 years ago. See the chart below. For example, if this stock was purchased 15 years ago, a shareholder would have covered 46.39% of the cost of the shares.
| Years | Yield | Cost Cov |
|---|---|---|
| 5 | 1.16% | 4.36% |
| 10 | 6.17% | 31.80% |
| 15 | 8.33% | 46.39% |
| 20 | 35.20% | 199.43% |
| 25 | 233.27% | 1321.56% |
The Dividend Payout Ratios (DPR) are low and good. The DPR for EPS for 2021 is 10.5% with 5 year coverage at 10%. The DPR for CFPS for 2021 is 6.5% with 5 year coverage at 6.3%. The DPR for Free Cash Flow for 2021 is 9.4% with 5 year coverage at 9%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is 0.14 and is very good. The Liquidity is low at 1.20, but if you add in cash flow after dividends, the ratio is much better at 1.84. The Debt Ratio is good at 1.75. The Leverage and Debt/Equity Ratios are fine at 2.33 and 1.33.
The Total Return per year is shown below for years of 5 to 25 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 20.79% | 7.96% | 7.33% | 0.63% |
| 2010 | 10 | 26.51% | 26.39% | 25.40% | 0.99% |
| 2005 | 15 | 14.75% | 18.03% | 17.42% | 0.61% |
| 2000 | 20 | 24.78% | 24.04% | 0.74% | |
| 1995 | 25 | 27.27% | 26.57% | 0.70% |
The Total Return per year is shown below for years of 5 to 27 to the end of 2020 in US$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 21.56% | 9.86% | 9.21% | 0.65% |
| 2010 | 10 | 23.35% | 23.29% | 22.38% | 0.91% |
| 2005 | 15 | 14.05% | 17.17% | 16.55% | 0.62% |
| 2000 | 20 | 24.02% | 23.25% | 0.78% | |
| 1995 | 25 | 26.09% | 25.38% | 0.72% | |
| 1992 | 27 | 29.85% | 28.99% | 0.86% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.11, 15.12 and 17.73. The corresponding 10 year ratios are 12.29, 15.89 and 18.94. The corresponding historical ratios are 12.49, 16.06, and 19.97. The current P/E Ratio is 18.93 based on a stock price of $52.11 and EPS estimate for 2022 of $2.75 ($2.20 US$). The current ratio is between the median and high 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. These are fairly consistent ratios and gives confidence in the stock price testing.
I get a Graham Price of $29.30. The 10 year low, median, and high median Price/Graham Price Ratios are 1.17, 1.48 and 1.76. The current P/GP Ratio is 1.78 based on a stock price of $52.11. The current ratio is above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, the ratio is just above the high 10 year ratio so it is just inside the expensive range.
I get a 10 year median Price/Book Value per Share Ratio of 3.27. The current P/B Ratio is 3.60 based on a Book Value of $12,181M, Book Value per Share of $11.28 and a stock price of $40.57. The current P/B Ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This stock price testing is in US$. You will get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 9.26. The current P/CF Ratio is 11.62 based on Cash Flow per Share estimate for 2022 of $3.49, Cash Flow of $3,364M and a stock price of $40.57. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This stock price testing is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 0.62%. The current dividend yield is 0.67% based on a stock price of $52.11 and Dividends of $0.35. The current dividend yield is 8% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This stock price testing is in CDN$. Dividends are paid in CDN$.
I get an historical median dividend yield of 0.60%. The current dividend yield is 0.67% based on a stock price of $52.11 and Dividends of $0.35. The current dividend yield is 11.5% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This stock price testing is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.54. The current P/S Ratio is 0.79 based on a stock price of $40.57, Revenue estimate for 2022 of $55,561M and Revenue per Share of $51.55. The current ratio is 45% above the 10 yar median ratio. This stock price testing suggests that the stock price is relatively expensive. This stock price testing is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably on the expensive side. The dividend yield tests say that the stock price is reasonable and below the median, but the P/S Ratio test does not confirm this and instead says it is expensive. The last dividend increase was good at 25% but was in 2020. There has been no dividend increases in 2021 and it is August. Dividend increases show how confident managements is in the future and so is an important indicator.
Is it a good company at a reasonable price? The stock price is probably on the expensive side, but may not be too expensive to buy. I think that this is a great company and it certainly seems to have a bright future.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (8) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $54.50 ($43.55 US$). This implies a total return in CDN$ of 5.26% with 4.58% from capital gains and 0.67% from dividends.
The recent August 2021 entries on Stock Chase talk about this stock as a top pick. Chris MacDonald on Motley Fool says it is one of the best value picks on the TSX right now. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and list one risk. A writer on Simply Wall Street likes that the company is growing its EPS and has a large insider ownership. Scott on YouTube talks about this stock. Alex Court on YouTube channel called Financial Future Guide also reviews this stock.
Alimentation Couche-Tard Inc operates a network of convenience stores across North America, Ireland, Scandinavia, Poland, the Baltics, and Russia. In addition, the company operates more stores under the Circle K banner in other countries such as China, Egypt, and Malaysia. Revenue from external customers fall mainly into three categories: merchandise and services, road transportation fuel, and other. 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 Monday, August 23, 2021 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.
No comments:
Post a Comment