Is it a good company at a reasonable price? A number of analysts are worried about the possible purchase by this company of 7-Eleven stores. The company already has a lot of debt. This company has certainly done well for its shareholders in the past. Of course, it is never certain how a purchase of another company will work out. I do wonder about the reasonableness of the current stock price as so many of the stock price tests are showing the stock price as expensive. It could be at the high end of the reasonableness stock price range.
I do not own this stock of Alimentation Couche-Tard Inc (TSX-ATD, 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. 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 the end, I did not buy a condo, but I came close.) 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 CEO is selling off shares and the number of shares he has decreased by 65% over the past year. The new CFO who joined last year has no shares. The Chairman increased his shares over the past year by 0.13%, but he has over 123M shares. The problem is that people can sell for all sorts of reasons, but generally only buy because they feel positive about the company.
This company is seeking to buy 7-Eleven Stores. See article on Financial Post
This stock is growing well and providing a good return to shareholders. See growth in the chart below and Shareholders Total Return furth down in this report. In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2025 (July 2024) and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth US$ | 17.16% | 3.22% | 12.97% | <-12 mths |
| 5 | AEPS Growth | 69.46% | 11.12% | -0.36% | <-12 mths |
| 5 | Net Income Growth | 48.85% | 8.28% | 11.00% | <-12 mths |
| 5 | Cash Flow Growth | 56.22% | 9.33% | ||
| 5 | Dividend Growth | 205.80% | 25.05% | 7.21% | <-12 mths |
| 5 | Stock Price Growth | 89.32% | 13.62% | 9.48% | <-12 mths |
| 10 | Revenue Growth US$ | 82.48% | 6.20% | 10.02% | <-this year |
| 10 | AEPS Growth | 293.01% | 14.67% | 7.12% | <-this year |
| 10 | Net Income Growth | 236.50% | 12.90% | 12.76% | <-this year |
| 10 | Cash Flow Growth | 237.03% | 12.92% | ||
| 10 | Dividend Growth | 770.32% | 24.16% | 12.42% | <-this year |
| 10 | Stock Price Growth | 294.42% | 14.71% | 9.48% | <-this year |
If you had invested in this company in December 2013, for $1,011.94 you would have bought 76 shares at $13.32 per share. In December 2023, after 10 years you would have received $217.93 in dividends. The stock would be worth $5,930.28. Your total return would have been $6,148.21. This would be a total return of 20.17% per year with 19.34% from capital gain and 0.82% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $13.32 | $1,011.94 | 76 | 10 | $217.93 | $5,930.28 | $6,148.21 |
The current dividend yield is low with dividend growth good. The current dividend yield is low (below 2%) at 0.86. The 5, 10 and historical median dividend yields are low at 0.79%, 0.65% and 0.67%. The dividend growth is good (15% and above) at 24.3% per year over the past 5 years. The last dividend increase was in 2024 and it was for 25%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 16% with 5 year coverage at 12%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 16% with 5 year coverage at 12%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 9% with 5 year coverage at 8%. The DPR for 2023 for Free Cash Flow (FCF) is good at 17% with 5 year coverage at 12%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 16.36% | 12.31% |
| AEPS | 16.42% | 12.06% |
| CFPS | 9.48% | 7.57% |
| FCF | 16.72% | 11.54% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.17 and currently at 0.16. The Liquidity Ratio for 2023 is low at 0.96 and 0.96 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.51 and currently at 1.52. The Debt Ratio for 2023 is good at 1.56 and 1.56 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.80 and 1.79and currently at 2.80 and 1.79.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.17 | 0.16 |
| Intang/GW | 0.20 | 0.18 |
| Liquidity | 0.96 | 0.96 |
| Liq. + CF | 1.51 | 1.52 |
| Debt Ratio | 1.56 | 1.56 |
| Leverage | 2.80 | 2.80 |
| D/E Ratio | 1.79 | 1.79 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2023 in CDN$. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 24.28% | 18.95% | 18.11% | 0.87% |
| 2013 | 10 | 26.43% | 20.17% | 19.34% | 0.75% |
| 2008 | 15 | 24.57% | 27.20% | 26.10% | 1.18% |
| 2003 | 20 | 16.55% | 20.81% | 20.12% | 0.68% |
| 1998 | 25 | 24.13% | 23.42% | 0.71% | |
| 1993 | 30 | 31.28% | 30.25% | 0.98% | |
| 1992 | 31 | 32.43% | 31.33% | 1.14% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 25.05% | 19.66% | 18.79% | 0.87% |
| 2013 | 10 | 24.16% | 17.38% | 16.63% | 0.75% |
| 2008 | 15 | 23.69% | 26.62% | 25.44% | 1.18% |
| 2003 | 20 | 15.48% | 19.28% | 18.60% | 0.68% |
| 1998 | 25 | 22.68% | 21.98% | 0.71% | |
| 1993 | 30 | 29.02% | 28.03% | 0.98% | |
| 1992 | 31 | 31.28% | 30.14% | 1.14% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.11, 14.22 and 16.38. The corresponding 10 year ratios are 13.35, 15.64 and 18.28. The corresponding historical ratios are 12.50, 15.96 and 19.85. The current P/E Ratio is 14.26 based on a stock price of $80.43 and EPS estimate for 2025 of $5.64 ($4.14 US$). The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.49, 14.44 and 17.51. The corresponding 10 year ratios are 13.97, 16.83 and 19.68. The current P/AEPS Ratio is 19.70 based on AEPS estimate for 2025 of $3.01 and a stock price of $59.31. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get the same result in CDN$.
I get a Graham Price of $41.64. The 10-year low, median, and high median Price/Graham Price Ratios are 1.35, 1.57 and 1.81. The current ratio is 1.93 based on a stock price of $80.43. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 3.52. The current P/B Ratio is 4.30 based on a stock price of $59.31, Book Value of $13,189M, and Book Value per Share of $13.79. The current ratio is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get the same result in CDN$.
I also have a Book Value per Share estimate for 2024 of $15.07. This implies a ratio of 3.94 and Book Value of $14,148M with a stock price of $59.31. This ratio is 12% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get the same result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.81. The current P/CF Ratio is 11.54 based on Cash Flow per Share estimate for 2025 of $5.14, Cash Flow of $4,917M and a stock price of $59.31. The current ratio is 6.7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get the same result in CDN$.
I get an historical median dividend yield of 0.67%. The current dividend yield is 0.87% based on dividends of $0.70 and a stock price of $80.43. The current ratio is 30% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10 year median dividend yield of 0.65%. The current dividend yield is 0.87% based on dividends of $0.70 and a stock price of $80.43. The current ratio is 34% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 0.64. The current P/S Ratio is 0.74 based on Revenue estimate for 2025 of $78,250M, Revenue per Share of $79.65 and a stock price $59.31. The current ratio is 16.8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get the same result in CDN$.
Results of stock price testing is that the stock price is reasonable, but could be expensive. It is only the dividend yield testing and EPS Ratio testing that is showing the stock as cheap. Others are showing it was either as reasonable but above the median or expensive. The P/S Ratio testing is showing the price as reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (5) and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $87.80 ($64.43 US$) with a high of $96.67 ($70.94 US$) and low of $80.24 ($58.88 US$). The consensus price of $87.80 implies a total return of 10.03% with 9.16% from capital gains and 0.87% from dividends.
Most of the recommendations are a buy on Stock Chase for this company. However, the last ones are negative because this company has put out an offer to buy 7-Eleven Parent Company. Stock Chase gives this stock 5 stars out of 5. Chris MacDonald on Motley Fool thinks this is a great company to buy to make your retirement dreams come true. Amy Legate-Wolfe on Motley Fool thinks that this stock can help you get to $1 million. The company put out a press release via Newswire about their fourth quarter results in 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has one warning out of has a high level of debt. Simply Wall Street gives this stock 2 and one half stars out of 5.
Alimentation Couche-Tard Inc operates a network of convenience stores across North America, Europe, and Asia. In addition, the company operates more stores under the Circle K banner in other countries such as Indonesia, Egypt, Macau, and others. Its operation is geographically divided into the U.S., Europe and other regions, and Canada. Revenue from external customers falls mainly into three categories: merchandise and services, road transportation fuel, and others. 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 23, 2024 around 5 pm. Tomorrow on my other blog I will write about Toromont Industries Ltd.... learn more on Thursday, August 22, 2024 around 5 pm.
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