Good news for shareholders in Alimentation Couche-Tard (TSE:ATD), as the Canadian convenience store giant posted its earnings. The news was solid enough to send shares up fractionally in Tuesday morning’s trading.
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The numbers (which are reported in U.S. dollars) were solid, though they did not compare well against the previous quarter, at least in some cases. Earnings came in at $708.8 million, which was down 13.5% against the same time last year when Couche-Tard brought in $819.2 million. Sales, however, were up; total revenue came in at $17.4 billion, which was up 6% against the previous year, when $16.4 billion came in.
Earnings per diluted share, meanwhile, came in at $0.75, also down against this time last year, when it posted earnings per share of $0.85. Several factors hit Couche-Tard’s earnings all at once, starting with reduced consumer traffic, reduced demand from the traffic that showed up, and a reduced gross margin on transportation fuel.
Winning Deals with Friendliness
Couche-Tard also offered up a bit of a progress report on its purchase of 7-Eleven, with Couche-Tard’s CEO, Alex Miller, making the point that he planned to win the deal through a combination of being “friendly” but also “persistent.” Miller noted to analysts on the earnings call that Couche-Tard still considers the deal “…a strong opportunity to grow together and enhance our offerings and service to millions of customers across the globe.”
But with 7-Eleven parent company Seven & i’s founding family, represented by Junro Ito, looking to take the company private with an internal buyout offer, Couche-Tard’s uphill battle may ultimately slam into a wall.
Is Alimentation Couche-Tard Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Couche-Tard stock based on nine Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 1% increase in its share price over the past year, the average TSE:ATD price target of C$88.80 per share implies 12.6% upside potential.
