Today was a great day to be Canadian convenience store chain Alimentation Couche-Tard (TSE:ATD). It posted its earnings, and also set up a new confidentiality agreement with Seven & i about the potential sale of some of its United States locations. Both factors together drove a nice upward surge, and Alimentation Couche-Tard stock is up nearly 4% in Wednesday morning’s trading.
While the results suggested a certain hesitation among consumers—which is really nothing we did not already know—the results also suggested that it may not be as bad as some might have thought. Couche-Tard posted earnings of $0.68 per share, about C$0.97, which was ahead of what FactSet analysts were looking for at just $0.66. TipRanks data, meanwhile, looked for C$0.94 per share.
Revenue, meanwhile, also increased, hitting $20.9 billion. This was up 6.5% against last year, but was down against analyst expectations. Analysts were looking for $21.09 billion. But Couche-Tard noted that both merchandise and service revenue was on the rise, jumping 5% to hit $5.3 billion by itself. While it lost a little ground in the U.S., it gained a bit in Europe and added a healthy 2.8% in Canada.
Lower the Cone of Silence
Meanwhile, the move to make a deal with Japanese firm Seven & i continues, as the duo have set up a confidentiality agreement governing the potential sale of some of Couche-Tard’s Circle K locations in a bid to better pass regulatory muster should the deal to buy North American 7-Eleven locations go through.
Remember, not long ago, we heard that Seven & i was planning to break off its North American division, which would have been a good fit for Couche-Tard to come in and buy them up. The Japanese stores, meanwhile, would remain in Seven & i’s hands, which in turn would satisfy Japanese regulators. Further, Seven & i noted that this arrangement would let it pursue its own operations in the meantime, suggesting that a deal may well happen, at some point.
Is Alimentation Couche-Tard Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:ATD stock based on seven Buys assigned in the past three months, as indicated by the graphic below. After a 14.66% loss in its share price over the past year, the average TSE:ATD price target of C$88 per share implies 25.26% upside potential.
See more TSE:ATD analyst ratings
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