Declining sales and earnings were mostly due to the higher U.S. dollar, which hurt Canadian and European contributions to the business.
A recent cannabis industry partnership should position the company to profit from the expanding legal cannabis market in Ontario and eventually across Canada. At the same the ongoing integration of its businesses works to low its long-term costs.
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ALIMENTATION COUCHE-TARD (Toronto symbol ATD.B: www.couchetard.com) operates 12,575 convenience stores throughout North America and Europe. It continues to successfully integrate its major acquisitions and to position itself for future gains.
In the three months ended April 28, 2019, sales fell 3.7%, to $13.11 billion from $13.61 billion a year earlier (all figures except share price in U.S. dollars). Excluding one-time items, earnings fell 11.9%, to $295.0 million, or $0.52 a share, from $335.0 million, or $0.59. However, the declines were mostly due to the higher U.S. dollar, which hurt the contributions of the company’s Canadian and European operations.
Couche-Tard continues to grow by acquisition, including its 2017 purchase of convenience-store chain CST Brands for $4.4 billion. That growth strategy adds risk, especially with a list of acquisitions as big as CST. However, the company has a long track record of successfully integrating those businesses.
Growth Stocks: Alliance with Canopy Growth offers retail cannabis opportunities
The company and Canopy Growth (symbol WEED on Toronto) have entered into a trademark licensing agreement with one winner of the Ontario Alcohol and Gaming Commission’s 25 cannabis retailer licenses.
That lottery winner opened a “Tweed” branded retail store in London, Ontario on May 17, 2019. The licensee has full ownership and control over the store. However, it will sell Canopy Growth cannabis, using Couche-Tard’s retailing expertise in selling other age-restricted products such as tobacco and alcohol.
Longer term, the experience gained from this initial store should position Couche-Tard and Canopy Growth to expand elsewhere in Ontario when the provincial government allows more stores. It will also set them up to expand across Canada as well as the U.S. and internationally.
The stock trades at 18.9 times the forecast fiscal 2020 earnings of $3.22 U.S. a share. Couche-Tard raised its quarterly dividend by 25.0% with the April 2019 payment, to $0.125 (Canadian) a share from $0.10. The shares now yield 0.6%.
The company’s outlook remains positive, and earnings should rise as it further integrates its acquisitions. Couche-Tard also plans to continue to launch fresh-food initiatives and promotions to boost its sales. All these moves should further push up its share price. It has already risen 35% over the last year, and we think it can go higher.
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Privacy Policy and Terms of Use
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
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The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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TSI Network may revise this Policy from time to time.
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The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
