Earlier today, gas station & convenience store operator Alimentation Couche-Tard (TSE:ATD) reported its Fiscal Q2-2023 results, which missed both revenue and earnings-per-share (EPS) estimates. Nonetheless, ATD’s earnings were solid, and the company increased its dividend per share by 27.3%, bringing the quarterly rate to C$0.14 per share. Please note that the following figures are in U.S. dollars unless otherwise stated.
ATD’s revenue rose to $16.9 billion, an 18.7% year-over-year increase, which beat expectations of $17.37 million. Notably, its fuel revenues grew by over 24% due to higher gas prices.
Nonetheless, its adjusted earnings per share were $0.82 (C$1.12), less than the $0.84 consensus estimate ($1.13 in Canadian dollars). Still, its adjusted diluted EPS grew by over 26% year-over-year, while adjusted net income grew by 20.9%. EPS grew faster than net earnings due to the company repurchasing $205.2 million worth of shares in Fiscal Q2. Additionally, ATD had a high return on capital employed of 16.4%, 50 basis points higher year-over-year.
However, its gross margin decreased to 16.94% compared to 18.2% last year. Also, same-store fuel volumes fell by 1.9% in the U.S. while falling 6.3% in Europe & other regions and 6.5% in Canada. Meanwhile, same-store merchandise sales increased in the U.S. and Europe as they fell 1.5% in Canada.
Is ATD Stock a Good Buy, According to Analysts?
Analysts are still bullish on Couche-Tard even after its rally this year. ATD stock has a Strong Buy rating based on six Buys assigned in the past three months. The average ATD price target of C$72 implies 17.2% upside potential.
Conclusion: Results Missed Expectations but Were Solid
Although ATD missed both revenue and EPS expectations, it didn’t miss by much, and the numbers are still good. EPS growth of over 26% is very high for a mature company, and its return on capital employed of 16.4%, coupled with its large dividend increase, is just as impressive.
