Alimentation Couche-Tard released its Q1 2019 results September 5th. Its stock price has surged subsequent to my March 22 and July 10 articles. This article looks at whether the shares are still fairly valued.



  • In my March 22 article I indicated I viewed the pullback in ATD’s stock price as a window of opportunity to acquire shares in ATD at a favorable valuation; I acquired another 500 shares for the FFJ Portfolio.
  • That article was followed up with my July 10 article in which I made a similar recommendation.
  • Strong Q1 results, aided by favorable weather conditions, have enabled ATD to generate strong free cash flow and to deleverage its balance sheet ahead of plan.
  • ATD is well aware of the risks posed by reason of electric vehicles eventually replacing fuel powered vehicles and is using Norway as its ‘laboratory’ to determine how best to adapt.
  • With over USD $51B in revenue for the fiscal year end April 29, 2018, a significantly larger US presence than in any other region of the world, and reporting in USD, I suspect ATD will list on a US exchange at some stage which will likely result in greater investor interest.

Alimentation Couche-Tard Inc. (TSX: ATD.a and ATD.b) reports its financial results in USD. Its stock, however, is traded on the TSX. Investors willing to purchase US shares over the counter should look at ANCUF. These shares, however, are very thinly traded.

ATD has Class A multiple-voting shares which are primarily held by insiders and which are very thinly traded. This article deals exclusively with the more commonly traded Class B subordinated voting shares.

ATD uses USD as its reporting currency since it provides more relevant information given the predominance of its operations in the United States. This article, therefore, reflects all figures in USD unless otherwise noted.


In my March 22 article I indicated ATD is an exceptional operator in a fragmented industry and the pullback in its stock price presented a window of opportunity for investors to acquire shares at an attractive valuation. For the sake of full disclosure, I acquired an additional 500 non-voting class B shares on March 21 for the FFJ Portfolio bringing the total holdings to 553 shares.

At the close of business on July 9th, ATD released its Q4 and FY2018 results. On July 10th it held its analyst call to review its performance and I wrote another article in which I indicated I was of the opinion that:

  • I fully expected ATD to focus on reducing its adjusted leverage ratio from 3.13:1 as at FYE2018;
  • ATD would most likely continue to make bolt-on acquisitions versus making a large transformational acquisition until such time as its adjusted leverage ratio was reduced to a level closer to 2:1 (it stood at ~3.13 as at April 29, 2018).

I concluded that article with:

‘I would acquire additional shares at current prices but am satisfied with my current exposure of 553 shares, and therefore, do not intend to acquire any additional shares at this juncture.’

On September 5, ATD released its Q1 2019 results. I am, therefore, once again taking a quick look at ATD (ATD is currently trading CDN ~$7 higher than at the time of my March 22 article) to determine whether it is still reasonably valued.

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