Alimentation Couche-Tard Inc (ATD) AI Stock Analysis

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Alimentation Couche-Tard Inc

(TSX:ATD)

77Outperform

Alimentation Couche-Tard Inc scores well due to strong financial performance and positive earnings call insights, highlighting robust growth in Canada and Europe. The valuation appears fair, though technical indicators suggest caution due to a bearish trend. Challenges in the U.S. market and high debt levels are notable risks, but effective cash flow management supports stability.

Positive Factors

Growth Opportunities

There remains significant opportunities for growth in Asia and Europe through global M&A roll-up.

International Expansion

Momentum is building outside the U.S., which positively impacts the company's valuation.

Product Performance

ATD's value meal bundles continue to perform well, better than our FQ3/25 assumptions.

Negative Factors

Acquisition Challenges

ATD would likely need to pay a multiple higher than its own valuation, and a significant amount of equity financing may be required.

Earnings Estimate

Analyst lowers EPS estimate reflecting a lower U.S. fuel margin forecast and reduced U.S. merchandise and fuel SSS due to a still soft consumer and disruptive weather conditions.

Franchise Limitations

Half of Seven's North American c-store network are franchised, which may limit the synergies potential.

Alimentation Couche-Tard Inc (ATD) vs. S&P 500 (SPY)

Market Cap

C$67.23B

Dividend Yield1.04%

Average Volume (3M)1.60M

Price to Earnings (P/E)18.9

Beta (1Y)0.50

Revenue Growth11.62%

EPS Growth-8.08%

CountryCA

Employees149,000

SectorConsumer Cyclical

Sector Strength63

IndustrySpecialty Retail

Share Statistics

EPS (TTM)3.76

Shares Outstanding948,064,400

10 Day Avg. Volume1,606,372

30 Day Avg. Volume1,598,689

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.63

Price to Cash Flow (P/CF)8.70

P/FCF Ratio12.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$85.75

Price Target Upside20.93% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering12

Alimentation Couche-Tard Inc Business Overview & Revenue Model

Company DescriptionAlimentation Couche-Tard Inc. (ATD) is a leading global convenience store operator headquartered in Laval, Quebec, Canada. The company operates a vast network of convenience stores across North America, Europe, and other regions under various brand names, including Circle K, Couche-Tard, and Ingo. Its core offerings include a wide range of convenience products such as food, beverages, snacks, and everyday essentials, along with fuel services at many of its locations.

How the Company Makes MoneyAlimentation Couche-Tard Inc. generates revenue primarily through the sale of merchandise and fuel. The company's convenience stores offer a wide array of products, including food, beverages, snacks, and other everyday items, which contribute significantly to its overall revenue. Fuel sales are another critical revenue stream, as many of its locations provide gasoline and diesel services. The company's earnings are further bolstered by its strategic acquisitions and partnerships, allowing it to expand its market presence and optimize its operations. Couche-Tard benefits from economies of scale and a strong supply chain network, enhancing its profitability and competitive edge in the retail and fuel market.

Alimentation Couche-Tard Inc Financial Statement Overview

Summary

Alimentation Couche-Tard Inc exhibits strong financial performance with robust profitability metrics and solid cash flow generation. The company maintains a balanced capital structure with manageable leverage. However, attention should be paid to the decrease in free cash flow growth, which could impact liquidity if it continues. Overall, the company is well-positioned financially within the Retail - Discretionary industry.

Income Statement

Very Positive

The company shows a strong gross profit margin of 17.2% and a solid net profit margin of 3.5% for TTM (Trailing-Twelve-Months). Revenue growth is healthy at 5.3% compared to the previous annual period, and EBITDA margin remains robust at 8.0%. These metrics indicate strong profitability and growth trajectory despite a slight decrease in EBIT margin.

Balance Sheet

Positive

The debt-to-equity ratio is 1.02, which reflects a moderate level of leverage. Return on equity is solid at 18.4%, indicating effective use of equity to generate profits. The equity ratio stands at 37.7%, suggesting a balanced capital structure. The balance sheet is stable but could face risk if debt levels increase.

Cash Flow

Very Positive

The operating cash flow to net income ratio is 1.87, demonstrating strong cash generation ability relative to earnings. The free cash flow to net income ratio of 1.03 indicates adequate free cash flow generation. However, free cash flow growth has decreased by 7.3% from the previous annual report, which could highlight potential investment or growth initiatives.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
72.90B	69.26B	71.86B	62.81B	45.76B	54.13B
	Gross Profit
12.55B	12.10B	12.05B	11.00B	10.12B	9.73B
	EBIT
3.75B	3.81B	4.23B	3.68B	3.68B	3.16B
	EBITDA
5.84B	5.73B	5.82B	5.27B	5.05B	4.55B
	Net Income Common Stockholders
2.58B	2.73B	3.09B	2.68B	2.71B	2.35B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.23B	1.87B	929.20M	2.17B	3.03B	3.68B
	Total Assets
37.11B	36.94B	29.05B	29.59B	28.39B	25.68B
	Total Debt
14.18B	14.47B	9.47B	9.44B	9.60B	10.38B
	Net Debt
12.02B	13.16B	8.63B	7.30B	6.59B	6.74B
	Total Liabilities
23.01B	23.64B	16.48B	17.15B	16.21B	15.61B
	Stockholders Equity
13.97B	13.19B	12.56B	12.44B	12.18B	10.07B
Cash Flow		Free Cash Flow
2.67B	2.87B	2.54B	2.28B	2.86B	2.31B
	Operating Cash Flow
4.81B	4.82B	4.34B	3.94B	4.09B	3.72B
	Investing Cash Flow
-5.36B	-6.60B	-2.28B	-1.80B	-1.39B	-1.21B
	Financing Cash Flow
1.26B	2.21B	-3.35B	-2.95B	-3.43B	480.70M

Alimentation Couche-Tard Inc Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price70.91

Price Trends

50DMA

71.04

Negative

100DMA

74.80

Negative

200DMA

75.96

Negative

Market Momentum

MACD

-0.27

Negative

RSI

49.74

Neutral

STOCH

34.37

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ATD, the sentiment is Neutral. The current price of 70.91 is above the 20-day moving average (MA) of 70.13, below the 50-day MA of 71.04, and below the 200-day MA of 75.96, indicating a neutral trend. The MACD of -0.27 indicates Negative momentum. The RSI at 49.74 is Neutral, neither overbought nor oversold. The STOCH value of 34.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:ATD.

Alimentation Couche-Tard Inc Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NWC	80 Outperform	C$2.51B	18.23	18.85%	3.02%	4.23%	6.08%
L	78 Outperform	$61.66B	29.06	19.33%	1.00%	2.49%	7.16%
EMP.A	78 Outperform	C$11.20B	17.05	12.64%	1.69%	1.05%	-6.94%
ATD	77 Outperform	C$67.23B	18.88	18.66%	1.04%	11.62%	-8.08%
MFI	73 Outperform	C$2.93B	30.11	6.33%	3.81%	0.89%	―
PKI	66 Neutral	C$5.74B	45.31	4.00%	4.45%	-12.79%	-72.79%
Sector *	59 Neutral	$11.53B	10.43	-0.22%	4.02%	1.19%	-15.83%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:ATD

Alimentation Couche-Tard Inc

70.37

-4.97

-6.60%

TSE:L

Loblaw Companies

210.14

62.62

42.45%

TSE:EMP.A

Empire Co Cl A NV

48.02

16.60

52.83%

TSE:MFI

Maple Leaf Foods

24.09

1.89

8.51%

TSE:NWC

North West

54.11

15.98

41.91%

TSE:PKI

Parkland

33.00

-8.45

-20.39%

Alimentation Couche-Tard Inc Earnings Call Summary

Earnings Call Date: Mar 18, 2025 | % Change Since: 6.87% | Next Earnings Date: Jul 1, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong performance in Canada and Europe, successful M&A activities, and growth in meal deals and loyalty programs. However, challenges in the U.S. market, including severe weather impacts, declining tobacco sales, and inflationary pressures, were noted. The company is actively working on strategic initiatives to address these issues and leverage growth opportunities.

Highlights

Positive Same-Store Sales in Canada and Europe

Same-store sales were positive in both Canada (2.8% increase) and Europe (0.2% increase) compared to the same quarter last year.

Successful M&A Activities

One-year anniversary of acquiring assets from TotalEnergies, nearly doubling size in Europe and generating expected synergies. Progress in acquiring Seven & I Holdings noted.

Strong Performance in Canadian Alcohol Sales

Following legal changes, close to 50% of beer sales in Canada come from Central Canada's business unit, with excellent performance in beer space.

Growth in Meal Deals and Loyalty Programs

Nearly 465,000 meal deals sold weekly in North America; U.S. Inner Circle loyalty program registrations up 13%, closing in on 10 million members.

Increased Employee Retention and Engagement

Significant improvement in store turnover and new hire retention, awarded Gallup Exceptional Workplace Award for the fourth consecutive year.

Strong Fuel Margins

Fuel margins increased across all regions, with margins in the U.S. at $44.28 per gallon, an increase of $1.09 per gallon.

Improved U.S. Merchandise Margin

Merchandise and service gross margin in the U.S. increased by 0.9% to 34%.

Adjusted EBITDA Growth

Adjusted EBITDA increased by 11.3% compared with the corresponding quarter of fiscal 2024.

Lowlights

Challenges in U.S. Fuel and Merchandise Sales

Same-store road transportation fuel volumes decreased by 3% in the U.S.; same-store merchandise revenues decreased by 0.1%.

Impact of Severe Weather in U.S.

Winter storms in Southern U.S. negatively impacted sales performance, estimated to have impacted same-store sales by 30 basis points.

Softness in U.S. Tobacco Sales

Overall U.S. tobacco sales were down about 1%, with cigarette sales declining by 2.5%.

Inflationary Pressures Persist

Ongoing inflationary conditions affecting consumer spending and company operations.

Lower Canadian Merchandise Margin

Canadian merchandise and service gross margin decreased by 1.8% to 32.4%, primarily due to product mix changes.

Company Guidance

In the third quarter of fiscal year 2025, Alimentation Couche-Tard reported positive improvements in business performance despite ongoing consumer caution in spending. Same-store sales increased by 2.8% in Canada and 0.2% in Europe, with a slight decline of 0.1% in the United States, affected by historic winter storms. The company's meal deal promotions showed strong growth, selling nearly 465,000 meal deals weekly across North America. Fuel margins remained stable, with a road transportation fuel gross margin of $44.28 per gallon in the U.S., €9.29 per liter in Europe, and CAD13.54 per liter in Canada. The company also reported a 13% increase in U.S. Inner Circle loyalty registrations, nearing 10 million members. Additionally, Couche-Tard's European B2B transit charging volumes grew by 70% year-over-year. Overall, adjusted EBITDA rose by 11.3%, and the company declared a quarterly dividend of CAD19.5 per share.

Alimentation Couche-Tard Inc Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures

Alimentation Couche-Tard Reports Positive Q3 2025 Results Amid Market Challenges

Positive

Mar 18, 2025

Alimentation Couche-Tard Inc. reported a positive third quarter for fiscal year 2025, with net earnings attributable to shareholders reaching $641.4 million, up from $623.4 million in the previous year. The company experienced growth in same-store sales in Canada and Europe, while the U.S. market showed sequential improvement despite challenges from winter storms. The fuel business maintained market share in the U.S., and merchandise and service revenues increased by 5.0%. The company continues to focus on organic growth and acquisitions, marking the one-year anniversary of acquiring assets from TotalEnergies, which has contributed to its performance.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.