2023-11-30 18:41:53
Couche-Tard managed to maintain better than expected margins in all regions. (Photo: 123RF)
What to do with Alimentation Couche-Tard, BRP and Open Text titles? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
Alimentation Couche-Tard (ATD, $76.23): a solid quarter thanks to gasoline
True to its management’s philosophy of “delivering the numbers,” Alimentation Couche-Tard showed solid results in the second quarter of its 2024 fiscal year.
The company delivered earnings before interest, taxes, depreciation and amortization (EBITDA) of $1,472.4 million for the quarter and earnings per share of $0.82, above the consensus of $0.78.
Couche-Tard’s ability to control its costs has produced excellent results, as demonstrated by the growth in operating expenses limited to only 1.5% for the quarter.
Despite rather tepid same-store sales (open for more than a year), while consumer spending is slowing, Couche-Tard has managed to maintain better-than-expected margins in all regions, particularly on fuel.
The number of fuel customers remained growing compared to last year, but the average volume of gasoline fill-ups is down, notes Irene Nattel, an analyst at RBC Capital Markets, a symptom, she says, that consumers began to tighten their belts.
The drop in fuel prices at the start of the third quarter already gives encouraging signs of an increase in volumes
Revenues from sales and services were up 2.8% compared to the same period last year, but down -1.7% from forecasts, Same-store sales were negative in the United States and in Europe while they were modestly positive in Canada.
During the earnings call, management explained that it was the decline in tobacco sales that was the main factor that weighed down sales. “Without the decline in sales of tobacco products, we would have a positive quarter for same-store sales.” explained Couche-Tard CEO Brian Hannash.
The company repurchased 18.5 million of its shares for a total amount of $918.6 million, or approximately 38% of the 49.1 million shares authorized for fiscal year 2024.
Irene Nattel maintains her forecast essentially unchanged, “we remain below the 2028 EBITDA target of $8.9 billion excluding M&A, and $10 billion including M&A, which suggests a bias to the forecasts increase as initiatives gain traction.”
RBC Capital Markets analyst reiterates his outperform rating on the stock and a target price of $94
Matthew Hains
BRP (DOO, $95.00): earnings per share down, but in line with forecasts
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