Alimentation Couche-Tard (TSX:ATD) is a convenience store giant that has been a remarkable Canadian success story. Over the past several decades, Alimentation Couche-Tard has transformed from a single store in Quebec to a retail powerhouse with more than 14,000 locations across multiple continents.
While several brick-and-mortar retailers have struggled to build consistent shareholder wealth in recent years, ATD stock has more than tripled investor returns since December 2014. If we adjust for dividend reinvestments, cumulative returns are closer to 250%.
Valued at a market cap of $76.4 billion, Alimentation Couche-Tard is among the largest companies in Canada, which continues to deliver impressive returns to shareholders via a combination of strategic acquisitions, operational efficiency, and an ability to adapt to changing consumer habits.
As investors search for resilient stocks in an uncertain market, let’s examine whether ATD deserves a spot in your portfolio.
A strong performance in fiscal Q2 of 2025
Alimentation Couche-Tard is a retail heavyweight that has demonstrated resilience despite facing macro headwinds amid sluggish consumer spending. In the fiscal second quarter (Q2) of 2025 (ended in October), ATD reported net earnings of $709 million or $0.75 per share. It saw a decline in same-store merchandise sales across regions, including Canada, the U.S., and Europe.
Alternatively, ATD continues to execute its growth strategy aggressively, pursuing the acquisition of Seven & I while announcing a $1.6 billion deal to acquire GetGo’s network of 270 stores. It is evident that ATD remains focused on future growth as it opened 14 new stores in Q2 and is on track to add more than 100 new locations in North America in fiscal 2025.
To offset challenging economic conditions, ATD has implemented several customer-focused initiatives. For example, its new meal deal program in the U.S. generates strong results, allowing the company to sell more than 300,000 meals weekly while its private label products are experiencing high single-digit growth.
Notably, Alimentation Couche-Tard’s private label products are experiencing high single-digit growth while its loyalty program is gaining traction. Its U.S. Inner Circle membership reached 8.3 million customers, an increase of 12% year over year. Additionally, its fuel business maintained healthy margins due to promotional activities and customer discounts.
From an operational perspective, ATD successfully navigated hurricane disruptions south of the border while progressing in integrating its European acquisitions, including TotalEnergies assets. Further, ATD’s electric vehicle charging network expanded to 2,900 charge points while related transactions grew by 65% year over year.
With $2.2 billion in cash and $2.7 billion in available credit, ATD is well capitalized as it ended Q2 with a leverage ratio of 2.07 times.
Is ATD stock undervalued?
Alimentation Couche-Tard pays shareholders an annual dividend of $0.78 per share, up from just $0.02 per share in 2006. Its strong financials and widening profit margins have allowed ATD to raise dividends by more than 20% annually for almost two decades.
The company’s board of directors recently raised the quarterly dividend by 11.4% year over year to $0.195 per share while allocating more than $500 million towards share buybacks.
Analysts tracking ATD stock expect adjusted earnings per share to expand from $2.81 in fiscal 2024 to $3.33 in fiscal 2026. So, priced at 24 times forward earnings, ATD stock is reasonably priced given its growth estimates. Analysts remain bullish and expect the TSX stock to gain over 12% in 2025, given consensus price target estimates.
