The 10-for-1 split in the e-commerce specialist’s stock last Wednesday failed to stem the fall of the stock, which has so far lost more than 80% of its market value since last fall. (Photo: 123RF)
What to do with the titles of Alimentation Couche-Tard, Shopify and Quincaillerie Richelieu? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from the one expressed.
Alimentation Couche-Tard (ATD.TO, $51.58): Canaccord analyst reiterates buy recommendation
Despite a rather mixed reaction from investors to the results for the 4th quarter of fiscal year 2022 of the second largest convenience store operator in North America, Derek Dley, analyst at Canaccord Genuity nevertheless reiterates his buy recommendation and his target price of $61. The stock price has lost almost 10% in the last 3 trading sessions.
According to him, a good margin on gasoline in the United States as well as the improvement in the dynamics of the labor market make the short-term outlook positive.
Last week, the firm announced that it had made adjusted earnings before interest, taxes and amortization (EBITDA) of $1.134 million, a result higher than the analyst’s forecast of $1,026 million.
Adjusted earnings per share came in at $0.55, while analysts were expecting $0.47.
Couche-Tard’s margins in the United States continued to be very strong, with gasoline reaching 46.1 cents per gallon in the 4th quarter, well above the forecast of $0.33 per gallon. Canaccord analyst and that of $0.34 achieved in the 4th quarter of 2021. These results are attributable to the optimization of the supply chain and to market conditions, explains management.
In Canada, the gasoline margin in the 4th quarter was 13.4 cents per litre, compared to the forecast of 10 cents. In contrast, in Europe and other regions, supply chain issues caused margins to shrink from 11 cents per liter to 7.5 cents per litre.
The firm’s balance sheet remains very solid, notes the analyst. The financial year ends with a net debt ratio of 1.39 times, which leaves plenty of room for future mergers and acquisitions and an increase in the return of capital to shareholders. Current market volatility could cause valuation multiples to compress, opening the door to some opportunities, management said.