Alimentation Couche-Tard (TSX:ATD) recently experienced a significant uptrend, with its shares climbing 25% from their 52-week lows. About 10% of this was in the last three months alone.
This surge is attributed to robust financial results and strategic leadership changes, making ATD an attractive investment opportunity. So, let’s get right into why.
Earnings up
The company’s strong financial performance underscores its resilience and growth potential. In the fourth quarter of fiscal 2024, ATD stock reported net earnings of $453 million, or $0.47 per diluted share. While this represents a decrease from the $670.7 million, or $0.68 per diluted share, reported in the same quarter the previous year, the company maintained solid profitability amidst challenging economic conditions.
For the full fiscal year 2024, net earnings per diluted share stood at $2.82, compared to $3.06 in fiscal 2023, and adjusted diluted net earnings per share were $2.81, reflecting a modest decrease of 9.9%. Notably, total revenues for the fourth quarter reached $17.6 billion, marking an 8.2% increase compared to the corresponding quarter in 2023. This growth was driven by strategic acquisitions, higher revenues in the wholesale fuel business, and a net increase in store count.
More growth to come
ATD stock’s expansion through strategic acquisitions has bolstered its market presence and growth trajectory. The acquisition of 2,175 sites from TotalEnergies SE in Europe for approximately €3.4 billion and 112 sites from MAPCO in the United States for US$468.7 million exemplifies the company’s commitment to strengthening its foothold in key markets. These acquisitions enhance ATD stock’s competitive position and contribute to its long-term growth strategy.
The recent leadership transition further reinforces the company’s strategic vision. The appointment of Alex Miller as the new president and chief executive officer, effective September 6, 2024, brings fresh leadership with a deep understanding of Couche-Tard’s operations and culture.
With over 25 years of experience in the retail fuel and convenience store industry, including nearly 13 years at Couche-Tard, Miller has proven his capability in leading the company’s operational, financial, and people aspects. The smooth transition is ensured by the continued role of Brian Hannasch as a special advisor, providing ongoing strategic guidance and support.
Cost management in tough times
Operational efficiency and cost management have been key pillars of ATD stock’s success. The company achieved a normalized decrease in expenses of 7.1% for the fourth quarter of fiscal 2024, demonstrating disciplined cost control despite inflationary pressures. Merchandise and service gross margins remained stable or improved across different regions, showcasing effective operations and product mix management. This operational prowess contributes to the company’s ability to maintain profitability and drive growth.
ATD stock’s focus on returning value to shareholders is evident through its share-repurchase program and dividend increases. The company repurchased shares worth $1.4 billion during fiscal 2024, indicating strong cash flow and a commitment to enhancing shareholder value. Additionally, the annual dividend declared for fiscal 2024 increased by 25.5%, from $0.53 to $0.665, reflecting confidence in the company’s long-term financial health.
Bottom line
Altogether, Alimentation Couche-Tard’s strong financial performance, strategic acquisitions, effective leadership transition, operational efficiency, and commitment to shareholder value make it a compelling investment opportunity. The 25% increase in share price from 52-week lows underscores investor confidence, presenting a strong case for buying ATD shares on the TSX.
