On Thursday, Canaccord Genuity adjusted its price target for Alimentation Couche-Tard Inc (ATD/B:CN) (OTC: ANCUF), a convenience store operator, decreasing it to C$85.00 from the previous C$87.00. Despite the reduction, the firm maintained its Buy rating on the company's stock.
The new price target is based on 20.5 times Canaccord's fiscal 2025 earnings per share (EPS) estimate of $3.03. This is a slight modification from the prior multiple of 20.3 times the earlier EPS forecast of $3.13. The adjustment reflects the conversion of the target into Canadian dollars to align with the company's share price listed on the Toronto Stock Exchange (TSX).
Canaccord remains optimistic about Couche-Tard's prospects, citing organic growth initiatives that are expected to support margin growth throughout the forecast period. Additionally, the firm believes that the structural market dynamics should sustain healthy fuel margins over the medium to long term.
The firm's outlook suggests that Couche-Tard is in a strong position to achieve low-teens growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) over the course of the forecast period. This projection underpins the continued endorsement of the stock with a Buy rating, despite the slight decrease in the price target.
In other recent news, Alimentation Couche-Tard disclosed its fiscal fourth-quarter operating results, with an adjusted EBITDA of $1.14 billion and earnings per share (EPS) of $0.48, slightly under the consensus estimate of $0.50. RBC Capital maintained its Outperform rating on the company, despite a slight downward adjustment in forecasts for fiscal years 2025 and 2026. Additionally, the company reported a 12% decrease in its third-quarter fiscal year 2024 adjusted earnings per share (EPS) of $0.65, missing analysts' projected EPS of $0.84.
Jefferies initiated a Buy rating for Alimentation Couche-Tard, pointing to its robust cash flow generation capabilities and potential for market share gains. The firm projected that the company could achieve an EBITDA of approximately $10 billion by 2028, translating into an EPS of $6.57. Stifel Canada also reiterated a Buy rating, acknowledging the successful progression of the company's integration efforts and the positive customer response to the rebranding of several stores to the Circle K banner.
Moreover, Stifel Canada maintained a positive outlook on Alimentation Couche-Tard, reiterating a Buy rating and a price target of Cdn$89.00. The firm acknowledged the successful progression of the company's integration efforts, noting the rebranding of several stores to the Circle K banner and the positive customer response.
InvestingPro Insights
Alimentation Couche-Tard Inc (ANCUF) has demonstrated a commitment to shareholder returns, having raised its dividend for 14 consecutive years, and maintained dividend payments for 20 consecutive years, signaling a strong track record of financial stability. This aligns with Canaccord Genuity's positive stance on the company's stock. In the realm of financial performance, the company has reported a gross profit of $12,097.9 million over the last twelve months as of Q4 2024, with a gross profit margin of 17.47%. While this margin may be considered weak by some, it is important to note that the company is still a prominent player in the Consumer Staples Distribution & Retail industry.
InvestingPro Tips indicate that analysts have tempered their earnings expectations for the upcoming period, with three analysts revising their earnings downwards. However, the company is expected to remain profitable this year, with profitability sustained over the last twelve months. Additionally, the company operates with a moderate level of debt and has achieved a high return over the last decade, which could be a sign of effective management and a solid investment over time.
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