ALIMENTATION COUCHE-TARD $49.82 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 418.1 million; Market cap: $29.0 billion; Dividend yield: 0.4%) (All amounts except share price and market cap in U.S. dollars) operates 6,314 convenience stores throughout North America. Canadian outlets operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand.
In Europe, Couche-Tard operates 2,233 stores across Scandinavia, Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia.
In the three months ended February 1, 2015, Couche-Tard’s sales rose just 1.7%, to $2.33 billion from $2.29 billion a year earlier. The higher U.S. dollar cut the revenue contribution of its European operations.
However, per-share earnings jumped 64.5%, to $0.51 from $0.31. Couche-Tard saw higher profit margins on merchandise and fuel, and it continues to save on interest costs as it pays down the debt it took on to acquire Norway’s Statoil Fuel & Retail gas station chain, which it bought for $2.7 billion in June 2012.
Couche-Tard’s long-term debt now stands at $1.7 billion, or just 7.2% of its $29.0-billion market cap.
On March 16, 2015, the company completed its $1.7-billion acquisition of The Pantry, which operates 1,500 convenience stores in 13 southern U.S. states.
Growth by acquisition can be risky, especially with deals as big as The Pantry purchase. But Couche-Tard has a long record of successfully integrating the companies it acquires.
Alimentation Couche-Tard is a buy.
