Is it a good company at a reasonable price? I must admit I wonder about calling this stock a dividend stock because the dividend is so low. Although, since this stock has grown so fast, people who bought it 10 years ago are getting a current dividend yield of 4.5% on their original investment. However, I do not think you can depend on this growing so fast in the future. I think that the stock price is probably reasonable, which most test say, but the dividend yield tests say it is cheap and the P/S Ratio test says it is expensive.
I do not own this stock of Alimentation Couche-Tard Inc (TSX-ATD, OTC-ANCUF). 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. 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 the financial year for this company ends at April 30 each year. So, I will be reviewing the financial year ending April 30, 2023. The dividend yield is extremely low around 0.8%. I generally do not buy stock when they have dividends below 1%. The company is reporting in US$, but the dividends are still being paid in CDN$.
This company is growing quite well. See chart below.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 39.81% | 6.93% |
| 5 | AEPS Growth | 140.31% | 19.17% |
| 5 | Net Income Growth | 95.36% | 14.33% |
| 5 | Cash Flow Growth | 100.85% | 14.97% |
| 5 | Dividend Growth | 163.26% | 21.36% |
| 5 | Stock Price Growth | 130.14% | 18.14% |
| 10 | Revenue Growth US$ | 102.17% | 7.29% |
| 10 | AEPS Growth | 509.77% | 19.82% |
| 10 | Net Income Growth | 622.62% | 21.87% |
| 10 | Cash Flow Growth | 274.08% | 14.10% |
| 10 | Dividend Growth | 648.61% | 22.30% |
| 10 | Stock Price Growth | 394.46% | 17.33% |
If you had invested in this company in December 2012, for $1,003.07 you would have bought 123 shares at $8.16 per share. In December 2022, after 10 years you would have received $282.64 in dividends. The stock would be worth $7,318.50. Your total return would have been $7,601.14. This is a total return would be 18.07% per year with 17.33% from capital gains and 0.81% from dividends. This is in CDN$
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $8.16 | $1,003.07 | 123 | 10 | $282.64 | $7,318.50 | $7,601.14 |
The current dividend yield is low with dividend growth good. The dividend yield is low (below 2%) at just 0.80%. The 5, 10 and historical dividend yields are also low at 0.75%, 0.62% and 0.65%. The dividend growth is good with growth over the past 5 years at 22.7% per year. The last dividend increase was in 2023 and it was for 27.3%.
The Dividend Payout Ratios (DPR) are good and low. The DPR for 2023 for Earnings per Share (EPS) is 12% with 5 year coverage at 8%. The DPR for 2023 Adjusted Earnings per Share (AEPS) is 12% with 5 year coverage at 11%. The DPR for 2023 for Cash Flow per Share (CFPS) is 8% with 5 year coverage at 7%. The DPR for 2023 for Free Cash Flow is 14% with 5 year coverage at 10%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 12.03% | 8.32% |
| AEPS | 11.80% | 10.66% |
| CFPS | 7.75% | 6.80% |
| FCF | 14.26% | 10.23% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good and low at 0.12. The Liquidity Ratio for 2023 is low at 1.10, but if you add in Cash Flow after dividends it is good at 1.87. The Debt Ratio is good at 1.76. The Leverage and Debt/Equity Ratios are fine at 2.31 and 1.31.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.12 | 0.12 |
| Intang/GW | 0.15 | 0.15 |
| Liquidity | 1.10 | 1.10 |
| Liq. + CF | 1.87 | 1.88 |
| Debt Ratio | 1.76 | 1.76 |
| Leverage | 2.31 | 2.31 |
| D/E Ratio | 1.31 | 1.31 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2022 CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 22.67% | 13.43% | 12.65% | 0.77% |
| 2011 | 10 | 25.89% | 22.95% | 21.99% | 0.88% |
| 2006 | 15 | 23.28% | 22.79% | 21.91% | 0.88% |
| 2001 | 20 | 16.02% | 22.94% | 22.13% | 0.80% |
| 1996 | 25 | 24.83% | 24.09% | 0.66% | |
| 1991 | 30 | 32.43% | 31.34% | 1.16% |
The Total Return per year is shown below for years of 5 to 30 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 21.36% | 11.75% | 10.98% | 0.77% |
| 2011 | 10 | 22.30% | 19.27% | 18.40% | 0.88% |
| 2006 | 15 | 20.88% | 20.73% | 19.85% | 0.88% |
| 2001 | 20 | 14.73% | 20.98% | 20.17% | 0.80% |
| 1996 | 25 | 21.35% | 20.69% | 0.66% | |
| 1991 | 30 | 31.19% | 30.03% | 1.16% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.08, 14.22 and 16.38. The corresponding 10 year ratios are 12.44, 15.64 and 18.28. The corresponding historical ratios are 12.49, 15.95 and 19.64. The current P/E Ratio is 18.01 based on a stock price of $69.73 and EPS estimate for 2024 of $3.87. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I also have Adjusted Earning per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.33, 14.44 and 17.51. The corresponding 10 year ratios are 12.87, 15.82 and 19.09. The current ratio is 17.89 based on a stock price of $51.69 and AEPS estimate for 2024 of $2.89. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I get a Graham Price of $40.71 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.22, 1.49 and 1.81. The current P/GP Ratio is 1.80 based on a stock price of $69.73. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 3.43. The current P/B Ratio is 4.04 based on a stock price of $51.69, Book Value of $12,565M, and Book Value per Share of $12.80. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate for 2024 of $14.20. This implies a Book Value of $13,955M, and a P/B Ratio of 3.64 based on a stock price of $51.69. This P/B Ratio is 6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.34. The current P/CF Ratio is 9.63 based on Cash Flow per Share estimate for 2024 of $4.56, Cash Flow of $4,475M and a stock price of $51.69. The current ratio is 10% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 0.65%. The current dividend yield is 0.80% based on stock price of 69.73 and dividends of $0.56. The current dividend yield is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$ and the dividends are paid in CDN$ even though the company is reporting in US$.
I get a 10 year median dividend yield of 0.62%. The current dividend yield is 0.80% based on stock price of 69.73 and dividends of $0.56. The current dividend yield is 30% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$ and the dividends are paid in CDN$ even though the company is reporting in US$.
The 10-year median Price/Sales (Revenue) Ratio is 0.59. The current P/S Ratio is 0.73 based on Revenue estimate for 2024 of $69,100M, Revenue per Share of $70.42 and a stock price of $51.69. The current ratio is 24% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably reasonable. It is harder to judge the price when the dividend yield test and the P/S Ratio test says very different things. The dividend yield tests say that the stock price is cheap and the P/S Ratio test says it is expensive. Most of the other testing is saying the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (6), Buy (10), and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $78.13 ($58.12 US$). This implies a total return of $12.85% with 12.05% from capital gains and 0.80% from dividends.
Most analysts like this stock on Stock Chase. Stock Chase gives this stock 5 stars out of 5. It is on the Money Sense list and the Aristocrat list, but not on the Maple Money List. Joey Frenette on Motley Fool thinks this is a good stock for a TFSA. Andrew Button on Motley Fool thinks this stock could create wealth for you. The company put out a press release on Newswire about their results for their 2023 fiscal year end.
Simply Wall Street via Yahoo Finance has put out a review of this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. They have two warnings of significant insider selling over the past 3 months; and has a high level of debt. Of the 6 insiders that I follow, two sold stocks, two bought stocks and two did not change.
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. Its operation is geographically divided into U.S., Europe, and Canada. 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 Wednesday, August 23, 2023 around 5 pm. Tomorrow on my other blog I will write about Winners and Losers.... learn more on Tuesday, August 22, 2023 around 5 pm.
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