2023-11-24 18:23:03
OPIS estimates the fuel margin in the United States at US43.6¢ per gallon in the second quarter for Couche-Tard. (Photo: 123RF)
What to do with titles from Empire, Cineplex and Couche-Tard? 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.
Empire (EMP.A, $38.91): the end of the stock’s outperformance
National Bank Capital Markets believes that Empire’s stock is coming to the end of a sequence where it has performed better than other companies in its sector of activity.
Analyst Vishal Shreedhar notes that the company’s stock is up 8.8% over the past 12 months, far ahead of Loblaw (+1.6%) and Metro (-6%), but also in a better position than the S&P TSX 60 index (+2.9%). The stock, among other things, benefited from a recovery in trading after a difficult performance the previous year (down 7.3%).
Vishal Shreedhar believes that Empire has an opportunity to utilize the weak comparables at its disposal in the second half of 2024, improvement initiatives already underway as well as an affordable valuation.
On the other hand, the company must endure structural deficiencies relative to its competitors, notably a mix between lower growth in traditional stores and lower exposure to the pharmacy sector (which represents, according to the analyst, a better mains as the power supply).
The valuation gap with its competitors is appreciable, and he believes that it will persist as long as Empire is not able to present comparables and growth similar to the competition.
As for the second quarter, the analyst expects earnings per share of $0.76 (market consensus at $0.74) which should reflect positive growth in same-store sales, a slight expansion of margins as well as share buybacks.
National Bank lowers its forecast of outperformance to performance equal to its sector of activity for Empire shares, but maintains its target price at $44.
TO FOLLOW: Cineplex (CGX, $8.78): a sale to relieve debt
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