ALIMENTATION COUCHE-TARD $57.58 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couchetard.com; Shares outstanding: 567.4 million; Market cap: $32.7 billion; Dividend yield: 0.4%) completed its $1.7-billion acquisition of The Pantry in March 2015. The move added 1,500 convenience stores in 13 southern U.S. states, bringing Couche-Tard’s total to 7,848 locations throughout North America.
In Europe, the company operates 2,230 stores across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic states (Estonia, Latvia and Lithuania) and Russia.
In the three months ended April 26, 2015, Couche-Tard’s sales fell 18.6%, to $7.29 billion from $8.95 billion a year earlier (all figures except share price in U.S. dollars).
The decline came from lower gasoline prices and the sale of Couche-Tard’s aviation-fuel business late last year. The higher U.S. dollar also cut the contribution from its European operations.# Earnings per share rose 13.6%, to $0.25 from $0.22. The company earned higher profit margins on merchandise and fuel. It also saved on interest costs as it paid down the debt it took on to acquire Norway’s Statoil gas station chain, which it bought for $2.7 billion in June 2012.
Growth by acquisition can be risky, especially with deals as big as The Pantry and Statoil purchases, but the company has a long record of successfully integrating the firms it acquires.
Couche-Tard is raising its quarterly dividend by 22.2% with the August 2015 payment, to $0.055 (Canadian) from $0.045. The shares yield 0.4%.
Alimentation Couche-Tard is a buy.
