2023-11-28 17:45:15
Alimentation Couche-Tard should have managed to do well thanks to its good management and the profits it will have made from the sale of gasoline, anticipates Chris Li of Desjardins Securities. (Photo: 123RF)
What to do with the titles of Couche-Tard, CAE and Tecsys? Here are some analyst recommendations likely to move prices soon. Note: the author may have an opinion completely different from that expressed.
Alimentation Couche-Tard (ATD, $79.2: saved by margins from gasoline
Like its peers, Alimentation Couche-Tard should have experienced a slowdown in demand in the United States and for tobacco products during the last quarter. However, it should have managed to do well thanks to its good management and the profits it will have made from the sale of gasoline, anticipates Chris Li of Desjardins Securities.
It expects same-store sales growth to reach 1.3%, up from 2.1% in the previous quarter. At this time last year, he recalls, it had jumped by 5.6%. He also finds that at 2.6%, the analyst consensus target is a little too optimistic.
If the volume of gasoline sales should not have changed compared to last quarter, or even slip by 0.5% in three months in Europe, it should instead have increased by 4.5% in Canada. Indeed, underlines Chris Li, the company has made efforts to regain market share.
The latter is banking on profit margins of around 46.50 American cents (US¢) per gallon, which is more than what the consensus expects (43 US¢ per gallon) or even the target of 40¢US per gallon on which table Alimentation Couche-Tard.
In Canada too, the analyst is more optimistic and anticipates a margin of 12.75¢ per liter.
Its selling, general and administrative expenses are expected to have jumped 3.5% year-over-year, which is slightly less than in the previous quarter, due to rising wages, inflationary pressures and its additional investments. The company should, however, have managed to limit the increase in its costs, believes Chris Li.
The analyst expects Couche-Tard’s earnings per share to have reached $0.77, while the consensus is for $0.78.
It is also revising upwards its expectations for the current financial year, now expecting earnings per share of 3.02 US dollars (US$) and revenues of 72.8 billion US dollars (US$B), rather than US$2.97 and US$72.7 billion respectively. In 2025, these should instead reach US$85.4 billion.
On the eve of the publication of the organization’s results, the latter does not believe that what will be revealed when the markets close on November 28, 2023 does not completely change the situation, although he intends to “review his forecasts and his evaluation following the results,” he wrote in his note.
He remains convinced that the company is well positioned to grow, and not just through acquisitions: according to him, the compound annual growth rate of its earnings before interest, taxes, depreciation and amortization should oscillate between 4% and 5% between financial years. 2023 and 2028. This is more prudent than the target set by the organization (7%), recognizes the analyst.
Its target price is maintained at $82, and its recommendation at “buy”.
CAE (CAE, $28.58): a sale that gives perspective
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