Canadian convenience store chain Alimentation Couche-Tard (TSE:ATD) recently reported earnings, and investors weren’t pleased with the latest results. In fact, shares slid over 4% in Thursday afternoon’s trading. It wasn’t that Couche-Tard came in poorly, it’s just that it didn’t do quite as well as it has in the past.
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It brought in a hefty US$623.4 million in the third quarter, which is great in isolation. However, considering that in the third quarter a year prior, it came in with US$737.4 million, that represents a pretty serious drop. Meanwhile, earnings per share (EPS) figures came in at $0.65, which was also down from the year-ago period of $0.73 per share.
Customers Are Adopting Value-Seeking Behavior
Couche-Tard experienced no shortage of optimism when it added another 2,000 sites in Europe and picked up some more in the United States. However, what it may not have seen coming was an overall economic downturn. Couche-Tard’s CEO Brian Hannasch noted that customers are adopting more “value-seeking” behavior, which means they’re looking for discounts pretty much everywhere, including their convenience store shopping.
The exact nature of that “value-seeking” will vary, but even Hannasch believes that the economic weakness currently seen is “transitory.” These are, of course, famous last words, given that they’re exactly what Treasury Secretary Janet Yellin had to say about inflation in general.
Is ATD Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ATD stock based on 10 Buys assigned in the past three months, as indicated by the graphic below. After a 23.68% rally in its share price over the past year, the average ATD price target of C$89.33 per share implies 13.81% upside potential.
