I am continuing my review this stock (TSX- ATD.B) today as I received the April 2009 annual report and I have not reviewed it since I received this report. I first bought this stock in January 2004 and bought more in December 2006 and June 2007. I said yesterday that I had made a return of 3.5%, including dividends on this stock. I had not realized that this stock has recently spiked higher. I updated my quicken data and looking at quicken with the latest price I have a return of 6.3%.
When looking at Insider Buying and Insider Selling, I find only Insider Selling. This selling is of options by an officer of the company. I do not think this means anything. It is always hard to speculate why insiders sell their shares. However, a lot of options given out are sold. Makes you wonder if giving out options is a good idea. I thought the idea was so that management has a stake in the company. However, if they turn around and sell the options as soon as they can, I do not really see why they should be given options.
Also, please note that over 60% of this company is owned by two companies. Metro Incorporated, a stock I also follow, owns 22%. Also over 40% of company is owned by Développements Orano Inc. The major shareholder of this last company is the CEO of Alimentation Couche-Tard Incorporated.
However, let’s go on to talk about the spreadsheet ratios and the Graham Price. First, the P/E ratio is relatively low at 13. For this stock, the 5 year average low is 14. The dividend yield at .73% is equal to the average. Please note on this stock, dividends only started in 2006. The dividend yield has been very low from the beginning. They pay out a very small proportion of their cash flow. A bad sign is that they have not increased their dividends in the year ending April 2009. It is the same as for the year that ended in April 2008. Considering the yield and the percentage of cash flow paid out, you got to wonder if this should really be considered a dividend paying stock.
The current price is about 15% higher than the Graham Price. At then end of the accounting year of April 2009, the stock price was lower than the Graham Price. This is considered a growth stock, and as such, the stock price is usually higher than the Graham Price. The stock price over the past 10 years has averaged about 50% higher than the Graham Price. When dealing with stocks, most things are all relative.
The Price/Book Value Ratio looks very good, whereby at the end of April 2009, this ratio was only 55% of the 10 year average. Today, it is still good at just 80% of the 10 year average. The last ratio to talk about is the Accrual Ratio. At the end of April 2009, it was negative and this is good. However, when I calculated this for the first quarter of 2010, it is at 11% and this is very high. However, the year is not yet over. The last thing to talk about is the Return on Equity. The 5 year average ROE is a healthy 18.7% and looking at the ROE for the 1 quarter, it would appear this year will be above this 5 year average.
If you look at the charts, you will see that this stock has gained a lot lately. From a low in the first part of July, it has spiked over 45%. When compared to the TSX index and the Consumers Staples Index, this stock has done better than both these indexes for all periods, but for the 3 year period. If you look at the long term of 10 years, it has done much better than both of these indexes.
When I look at analysts’ recommendations, the consensus is a Buy. There are quite a few analysts that follow this stock. There are many Buys and Holds and a few Strong Buys on this stock. (See my site for information on analyst ratings.) A number of analysts have recently changed their Hold rating to a Buy rating because of the strong 1st quarterly results for this company.
I do not have a lot of this stock, but I will retain what I have currently.
Alimentation Couche-Tard is Canada’s leading convenience store retailer under brands such as Couche-Tard, Mac’s, Becker’s, Mike’s Mart and has US brand Circle K. The company has alliances with fast-food chains including M & M Meat Shops, Pizza Pizza , Subway and Irving Oil. They just opened up Circle K brand in Vietnam. They are expanding into the U.S., having bought Johnson Oil, a major gas station and convenience store operator. Its web site is www.couche-tard.com. See my spreadsheet at www.spbrunner.com/stocks/atd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.
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